Homebuilder Sentiment in U.S. Rose for First Time in Five Months

Confidence among U.S. homebuilders rose in April for the first time in five months as prospective buyers returned to the market and sales climbed.

The National Association of Home Builders/Wells Fargo sentiment gauge increased to 56, the highest since January, from a revised 52 in the previous month, the Washington-based group reported Wednesday. Readings above 50 mean more respondents said conditions were good. The median forecast in a Bloomberg survey called for the gauge to climb to 55.

Warmer weather is encouraging builders to start work on more homes at a time when tight inventory has been pushing up housing prices. Sustained improvement in the job market and a long-awaited pickup in wage growth would help to further strengthen demand as the spring selling season begins.

The housing market is “going to show further steady improvement,” Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit, said before the report. “There’s demand, interest rates are still low, and people are feeling more confident not only in the economic outlook but also in their job security.”

Other figures Wednesday showed factory output barely climbed in March. A 0.1 percent gain in manufacturing was the first advance in four months and followed a 0.2 percent February decrease, according to the Federal Reserve. Production slumped at a 1.2 percent annualized rate in the first three months of the year, the biggest drop since the second quarter of 2009, just as the recession was ending.

Estimates in the Bloomberg survey for the homebuilder index ranged from 51 to 57 after a previously reported 53 in March.

By Region

Builder confidence increased in three of the four U.S. regions, with the biggest improvement coming from the Northeast. Sentiment also rose in the West and reached a five-month high in the South.

The group’s gauge of prospective buyer traffic increased to 41 from 37 last month, while the index of current single-family home sales rose to 61 from 58. The measure of the sales outlook for the next six months climbed to a four-month high of 64 in April from 59.

“This uptick shows builders are feeling optimistic that the housing market will continue to strengthen throughout 2015,” David Crowe, the association’s chief economist, said in a statement.

A stronger pace of job growth that’s accompanied by fatter paychecks may help persuade more Americans to take the plunge. Payrolls climbed by 126,000 in March, the smallest gain since December 2013, according to Labor Department data.

Hourly pay increased 2.1 percent from a year earlier, in line with the average since the expansion began in June 2009.

Mortgage Rates

“As the spring buying season gets under way, homebuilders are confident that current low interest rates and continued job growth will draw consumers to the market,” NAHB Chairman Tom Woods, a homebuilder from Blue Springs, Missouri, said in a statement.

As the Fed considers raising interest rates for the first time since 2006, the threat of higher borrowing costs may prompt some hesitant buyers to commit. The average 30-year, fixed-rate mortgage fell to a nine-week low of 3.66 percent in period ended April 9, according to data from Freddie Mac in McLean, Virginia.

A Commerce Department report Thursday will probably show housing starts rose to a 1.04 million pace in March from an 897,000 rate a month earlier, according to the median estimate in a Bloomberg survey.

Hovnanian Enterprises Inc., a Red Bank, New Jersey-based builder, is upbeat about the market’s prospects entering the busy selling season.

“The trend has been very positive, it’s picking up steam,” Chief Executive Officer Ara Hovnanian said in a March 25 interview on Bloomberg Television. “It feels a little stronger than last year.”

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