The housing market reached a significant milestone this month, with builder confidence soaring from May to June and reaching its highest level in more than seven years.
The monthly survey by the National Association of Home Builders, or NAHB, saw an 8-point increase since May, the biggest one-month gain since the summer of 2002. The NAHB/Wells Fargo Housing Market Index now stands at 52, above the score of 50 that separates positive and negative sentiment.
"This is the first time the (index) has been above 50 since April 2006, and surpassing this important benchmark reflects the fact that builders are seeing better market conditions as demand for new homes increases," NAHB Chairman Rick Judson said in a statement.
All three components of the index, which gauges perceptions of single-family home builders, moved into positive territory from May to June. Current sales conditions rose from 48 to 56; expectations of future sales rose 9 points to 61, and prospective buyer activity increased from 33 to 40.
The index is an important factor for investors who are watching housing starts, and this month gives them reason to celebrate, according to David Crowe, the NAHB's chief economist. The results of the survey are "consistent with our forecast for a 29 percent increase in total housing starts this year, which would mark the first time since 2007 that starts have topped the 1-million mark," he said in a statement.
For prospective homebuyers, new homes are attractive because of low inventory in existing homes for sale, Judson noted in the press statement. Buyers are also eager to close on homes while mortgage rates remain low.
Keep up with your wealth and mortgages, and follow me on Twitter.
Get more news, money-saving tips and expert advice by signing up for a free Bankrate newsletter.