The monthly housing data for June and July is cycling in, and it looks pretty good.
The Wells Fargo/NAHB Home Builder Sentiment Index posted at 59 for July. (Anything above 50 is good.) The sub-components within the index were particularly encouraging. Home builders reported strong current sales. Better yet, they expect strong sales to persist into the future. The future sales component of the index posted at a strong 63.
Traffic was the only weakness to be found, and that posted at 45. The weakness was tied to low interest from first-time buyers. As we know, lower-priced homes remain the hot niche in many markets. Potential first-time buyers still find it difficult to get their foot in the door of a new starter home.
With that said, sales are at the highest level since 2007. First-time home buyers accounted for 33% of existing home sales, the highest percentage since July 2012.
Back in January, we predicted that 2016 would be a strong year for housing. In fact, we thought it could be one of the strongest years in over a decade. We’re half way through 2016 and we’ve been proven right so far. The good news is that the second half of the year appears well positioned to build on the gains experienced in the first half of the year.
Housing has been the lead driver of economic growth for most of the past five years. It could easily remain in the driver’s seat for the next five years.