Builders say housing is back

June 17, 2013: 10:47 AM ET
home builder
More builders say sales conditions are good rather than poor, confirming earlier signs of a housing recovery.
NEW YORK (CNNMoney)

Is the housing recovery for real? It looks that way, as a key measure of home builder confidence crossed a major threshold Monday.

The National Association of Home Builders' index hit 52 in June, marking the first time it has been above 50 in seven years. A reading above 50 indicates that more builders say sales conditions are good rather than poor. The index has been posting gains for the last year, but those moves only indicated that builders thought the market was less bad than it had been.

"It's further confirmation of what we've felt for six months at least -- that the housing market is back and will continue to improve," said David Crowe, chief economist for the trade group.

June is typically a month when builders report slower activity, after the spring buying season peaks. But this year they're reporting better traffic levels and better sales conditions than they did in May.

The NAHB survey found that 41% of builders said current conditions are positive, almost double the percentage who said they were poor. A year ago, only 15% said conditions are good, while three times as many said it was a poor environment.

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There have been many recent signs of a housing recovery, including a drop in foreclosures, a steady rise in home prices and an increase in sales of both new and previously-owned homes. A rise in mortgage rates, up from recent record lows, has done little to slow the the housing market.

In Crowe's opinion, "it's not the level of rates that has held back the markets, it's the access to credit," he said, referencing the difficulties that buyers have had getting home loans in recent years.

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In fact, Crowe thinks higher rates are actually encouraging some lenders to be more aggressive in making new home loans, because they can no longer depend on a stream of refinancing for steady business.

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A report is due later this week on the actual level of home building from the Census Bureau. Additionally, the National Association of Realtors will issue a report on sales of previously-owned homes. Economists expect that both readings will show continued improvement.

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