Economy Watch: Homebuilders Happy

American homebuilders have finally climbed out of their crummy funk, according to the National Association of Home Builders.

By Dees Stribling, Contributing Editor

American homebuilders have finally climbed out of their crummy funk, according to the National Association of Home Builders on Monday. That is, the association’s housing market index increased eight points to a reading of 52 in June—the first time it’s been over 50 since before the housing market collapse. Over 50 means that more homebuilders than not see sales conditions as good instead of poor.

All three index components posted gains in June. The index gauging current sales conditions increased eight points to 56, while the index measuring expectations for future sales rose nine points to 61—its highest level since March 2006. The index tracking traffic of prospective buyers, the only one still in pessimistic territory, rose seven points to 40.

“This important benchmark reflects the fact that builders are seeing better market conditions as demand for new homes increases,” NAHB chairman Rick Judson, a home builder and developer from Charlotte, NC, said in a press statement. “With the low inventory of existing homes, an increasing number of buyers are gravitating toward new homes.”

FNC Home Price Index up

Another bit of good news for housing came on Monday from FNC. According to the latest FNC Residential Price Index, U.S. home prices were up 0.7 percent in April compared with March, though part of that is seasonal. FNC calculates its index based on sales of non-distressed residential properties in the 100 largest metro markets in the country.

On a year-over-year basis, home prices were up 4.6 percent, FNC also said.

The indices have been revised downward for the prior months, resulting in more moderate annual price accelerations, but the overall trend is still upward.

Improved credit availability, low interest rates, and low home prices continue to drive the housing recovery, noted FNC. Signs of rising mortgage rates—which have been hovering at historical lows in the last 10 months—have likely drawn out additional pent-up demand. Foreclosure activity continues to drop, with distressed sales contributing only 16 percent of total home sales, down from 17.8 percent in March and 21.6 percent a year ago.

Investors seem happy About G-8

While members of the G-8 were in Northern Ireland on Monday reportedly trying to hammer out a trade deal between the U.S. and the European Union, Wall Street had another up day in its latest bipolar run of trading sessions. Perhaps investors believe that Fed-style stimulus will not only continue in the U.S. but also take root in austerity-happy Europe too.

In any case, the Dow Jones Industrial Average was up 109.67 points, or 0.73 percent. The S&P 500 gained 0.76 percent, and the Nasdaq advanced 0.83 percent.

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