Confidence Among Homebuilders Increases to Five-Month High

Confidence among homebuilders climbed to a five-month high in June, signaling the residential real estate market may have some scope for a pickup, according to data Thursday from a National Association of Home Builders/Wells Fargo survey.

The builder sentiment gauge rose to 60 from 58; the median forecast in a Bloomberg survey was 59. Readings greater than 50 indicate more respondents reported good market conditions.

The gauge of prospective buyer traffic advanced to 47, the highest since November, from 44. Meanwhile, homebuilders' six-month sales outlook increased to 70, the strongest since October, from 65. And the index of current sales rose by a point to 64

Cheap borrowing costs and steady improvement in the labor market have bolstered Americans' abilities to buy homes, giving builders reason to be more optimistic. A pickup in wage growth will be needed to give additional households the confidence to buy and, in the process, lend a hand to economic growth.

"Rising home sales, an improving economy and the fact that the HMI gauge measuring future sales expectations is running at an eight-month high are all positive factors indicating that the housing market should continue to move forward in the second half of 2016," NAHB chief economist Robert Dietz said in a statement.

Confidence increased in three of the four U.S. regions, with builders in the South the most upbeat since October. Builder sentiment in the West reached a five-month high.