Homebuilder confidence in the U.S. showed another substantial improvement in the month of July, according to a report released by the National Association of Home Builders on Thursday.
The report said the NAHB/Wells Fargo Housing Market Index surged up to 72 in July after skyrocketing to 58 in June. Economists had expected the index to inch up to 60.
With the much bigger than expected jump, the NAHB noted the index now stands at the solid pre-pandemic reading in March before the coronavirus outbreak affected much of the nation.
"While the housing market is clearly rebounding, challenges exist," said NAHB Chief Economist Robert Dietz. "Lumber prices are at a two-year high and builders are reporting rising costs for other building materials while lot and skilled labor availability issues persist."
He added, "Nonetheless, the important story of the changing geography of housing demand is benefiting new construction."
The sharp increase by the headline index came as the index gauging current sales conditions jumped to 79 in July from 63 in June and the measure charting traffic of prospective buyers surged up 58 from 43.
The report said the component measuring sales expectations in the next six months also increased to 75 in July from 68 in June.
On Friday, the Commerce Department is scheduled to release a separate report on new residential construction in the month of June.
Housing starts are expected to spike to an annual rate of 1.169 million, while building permits are expected to jump to a rate of 1.290 million.