The NAHB home builder confidence survey in June was 67, down from 69 in May (revised from 70) and 3 pts below the estimate. All three components fell m/o/m by 2 pts with Prospective Buyers Traffic in particular back below 50 at 49 after 3 months above it.
Bottom line, notwithstanding the drop in confidence m/o/m it still remains at a good level (relatively speaking) because builders know the low inventory situation of existing homes and the NAHB said “builder confidence levels have remained consistently sound this year, reflecting the ongoing gradual recovery of the housing market.” The problem though still remains in that we are not getting enough homes built in the price range less than $250k where millennial demand is most apparent for those that could afford a down payment. The key reason for this is the low margin and less profitability that it entails because as the NAHB said today, “builders continue to express their frustration over an ongoing shortage of skilled labor and buildable lots that is impeding stronger growth in the single family sector” which of course raises the cost of doing business.
Also we can’t ignore that for those searching for adjustable rate mortgages, it just got a bit more expensive while fixed (priced off the 10 yr) of course remains very attractive.
The builder etf ITB is at the low of the day in response to the data miss but follows 4 days in a row of gains.
BUILDER SURVEY
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor.