While the housing market is showing some glimmers of hope, builders are still remaining cautious, according to recent data from the National Association of Home Builders (NAHB). The NAHB/Wells Fargo Housing Market Index (HMI) declined one point to 15 in June.

“The outlook for home sales has improved somewhat in recent months, due largely to implementation of the first-time home buyer tax credit and gains in housing affordability,” said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. “However, looking forward, home builders are facing a few headwinds, including expiration of the tax credit at the end of November; a recent upturn in interest rates; and especially the continuing lack of credit for housing production loans.”

NAHB Chief Economist David Crowe adds that builders are facing added difficulties to complete a sale because customers cannot sell their existing homes.

Derived from a monthly survey that NAHB has been conducting for more than 20 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

Some good news released by the NAHB is that nationwide housing starts rebounded in May from record lows in the previous month, posting a 17.2 percent gain to a seasonally adjusted annual rate of 532,000 units, according to U.S. Commerce Department figures.

While driven largely by a double-digit gain in the volatile multifamily sector, the uptick also reflected a substantial gain on the single-family side and applied consistently to all regions of the country.

“Today’s report showing three consecutive months of gains in single-family housing starts and two consecutive months of gains in single-family permits is a very welcome sign that the market may be nearing a turning point,” said Crowe.

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