Builder confidence in
the market for newly built, single-family homes gained five points in May from
a downwardly revised reading in the previous month to reach a level of 29 on
the National Association of Home Builders/Wells Fargo Housing Market Index (HMI),
released today. This is the index’s strongest reading since May of 2007.
“Builders in many
markets are reporting that buyer traffic and sales have picked back up after a
pause this April,” said Barry Rutenberg, chairman of the National Association
of Home Builders (NAHB) and a home builder from Gainesville, Fla. “It seems we
have resumed the gradual upward trend in confidence that started at the
beginning of this year, as stabilizing prices and excellent affordability
encourage more people to pursue a new-home purchase.”
“While home building
still has quite a way to go toward a fully healthy market, the fact that the
HMI has returned to trend is an excellent sign that firming home values,
improving employment and low mortgage rates are drawing consumers back,” said
NAHB Chief Economist David Crowe. “The pace of this emerging recovery could be
stronger were it not for the significant impediments that the market continues
to face with regard to builder and consumer access to credit, inaccurate
appraisals, and more recently, rising materials prices.”
Derived from a monthly
survey that NAHB has been conducting for 25 years, the NAHB/Wells Fargo Housing
Market Index gauges builder perceptions of current single-family home sales and
sales expectations for the next six months as “good,” “fair” or “poor.” The
survey also asks builders to rate traffic of prospective buyers as “high to
very high,” “average” or “low to very low.” Scores from each component are then
used to calculate a seasonally adjusted index where any number over 50
indicates that more builders view conditions as good than poor.
