Builder confidence rises in May

Strong buyer demand, low rates boost outlook

Builder confidence rose slightly this month, up three points to 70 on a seasonally adjusted annual basis, according to the National Association of Home Builders/Wells Fargo Housing Market Index released today.

Builders have maintained a confidence range between 67-71 for over a year, aided by buyer demand for new single-family homes, continued low mortgage rates and an improving job market, the association reported.

The index is derived from a monthly survey of builders that NAHB has been conducting for about 20 years. Each month, builders report current sales of single-family homes and prospects for sales in the next six months as either “good,” “fair” or “poor.” They also rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.

Builders rated the present state of single-family sales at 76 in May, the next six months in single-family sales as 77, and the traffic of prospective buyers at 53.

The component index gauging current single-family sales rose three points to 76 while the component index gauging sales expectations for the next six months and the component gauging traffic of prospective buyers were 77 and 53, respectively.

“Builders have seen an up-tick in traffic and sales brought on by improving economic conditions and mortgage rates that continue to remain at affordable levels. They have confidence in the overall housing market and expect sales to stay strong for the next six months,” said NAHB President Dave Wilson, a custom homebuilder from Ketchum, Idaho.

“Builders obviously continue to see strong buyer demand for single-family homes,” said NAHB Chief Economist David Seiders. “With unsold inventories in good shape, housing starts should be solid in coming months.”

The NAHB/Wells Fargo Housing Market Index is solely the product of the home builders' association and is not influenced by any other party. HMI historical information and tables are available online at: http://www.nahb.org/hmi.

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