Homebuilder confidence in U.S. rises to a seven-year high

Sales 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 back 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 Richardson, Texas-based Lennox International Inc., 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,” Joseph W. Reitmeier, chief financial officer of Lennox International, said in a June 12 presentation. “We can actually say that now.”

Mortgage Rates

Inexpensive borrowing costs are helping to attract would-be homebuyers, while a recent pickup in mortgage rates could be spurring buyers to enter the market to avoid even higher costs. The average rate for a 30-year fixed mortgage climbed to 3.98%, a 14-month high, in the second week of June, McLean, Virginia-based Freddie Mac said in a statement last week. Mortgage rates have risen for six straight weeks.

Builders started work on 780,000 homes last year, a 28% increase from 2011 and the most in four years. Figures tomorrow 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.

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