WASHINGTON — Confidence among U.S. homebuilders surged in June to the highest level in seven years, reflecting gains in sales as Americans rushed to take advantage of low mortgage rates.
The National Association of Home Builders/Wells Fargo index of builder sentiment rose 8 points to 52 during the month, the biggest monthly increase since September 2002, the Washington-based group reported Monday.
The reading was the highest since March 2006. Readings above 50 mean more respondents said conditions were good.
“Builders are experiencing some relief in the headwinds that are holding back a more robust recovery,” said David Crowe, the group’s chief economist, adding that the report “is consistent with our forecast for a 29 percent increase in total housing starts this year.”
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Low mortgage rates, a strengthening job market and limited inventories are benefiting builders as the housing market contributes to growth this year after emerging as a bright spot in 2012. Gains in housing will help the world’s largest economy move through a global slowdown that is hurting manufacturing.
Another report Monday showed manufacturers in the New York region felt more optimistic in June even as orders, sales and employment dropped, indicating the area’s factories are looking beyond the current slowdown in growth. The Federal Reserve Bank of New York’s general economic gauge, known as the Empire State index, climbed to 7.8 this month, the highest reading since March, from minus 1.4 in May. Readings of greater than zero signal expansion in New York, northern New Jersey and southern Connecticut.
The homebuilder index, first published in January 1985, averaged 54 in the five years leading to the recession that began in December 2007. It reached a record low of 8 in January 2009. The confidence survey asks builders to characterize sales as good, fair or poor and to gauge prospective buyers’ traffic. It also asks participants to assess the six-month outlook.
All three components of the homebuilder survey climbed to their highest levels since March 2006. The group’s gauge of the sales outlook for the next six months rose to 61 in June from 52. Prospective-buyer traffic advanced to 40 this month from 33. An index of current single-family home sales increased to 56 in June from 48.
Builder confidence improved in three of the four U.S. regions. A gauge of sentiment in the Midwest increased to 57 in June, the highest in records dating to 2004, from 44. In the South, it rose to 53 from 44, and climbed to 50 from 41 in the West. Confidence eased in the Northeast.
The recovery in housing is spreading beyond builders and benefiting companies such as Lennox International, a maker of furnaces and air conditioners.
“Over the last few years, it’s been tough to say that being in a business or an industry that’s tied closely to housing is a good thing,” said Joseph Reitmeier, chief financial officer of Lennox International. “We can actually say that now.”
Builders started work on 780,000 homes last year, a 28 percent increase from 2011 and the most in four years. Figures Tuesday may show housing starts increased to a 950,000 annual pace in May from an 853,000 rate a month earlier, economists forecast the Commerce Department to report.