The National Association of Home Builders/Wells Fargo (NAHB) builder sentiment index released Monday said that the index for June is the highest it has been since May 2007, reported NPR News. The increase has been occurring for seven of the past nine months.
Barry Rutenberg, chairman of The National Association of Home Builders has said that in specific housing markets, there is a "gradual improvement" which he accredits to low prices and interests rates. The index is primarily a survey given out every month to home builders across the country to record what the overall sentiment is about the housing market. NHAB has been distributing the survey for the past 25 years.
While the June index is a positive step and encouraging news, the index is still only at 29. For the housing market to be in good condition, the index has to has to be at 50.
In early June, TIME Magazine reported on the rapidly increasing rental rates in the United States. The average rental rate rose 6 percent in May and in some states rental prices rose over 10 percent.
Such extreme increases, makes one wonder why more people are continuing to rent rather than flock to the low pricing and interest rates of the housing market.
According NAHB's Chief Economist David Crowe builders are reporting that "overly tight lending conditions and inaccurate appraisals" are some of the primary deterrents in the market. In addition, the economy as a whole is still suffering and foreclosures are still fresh in people's minds. When NAHB's index reaches a number more near the status "good" people will be ready to take a risk again.