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 latest National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). This is the index's strongest reading since May 2007.
Each of the HMI's components rebounded from declines in the previous month. The component gauging current sales conditions and the component gauging traffic of prospective buyers each rose five points in May to 30 and 23, respectively, with the traffic component hitting its highest level since April 2007. The component gauging sales expectations in the next six months rose three points to 34.
Three out of four regions registered improving builder sentiment in May. This included a six-point gain to 32 in the Northeast, and five-point gains to 27 and 28 in the Midwest and South, respectively. The West posted a two-point decline, to 29.
‘Builders in many markets are reporting that buyer traffic and sales have picked back up after a pause this April,’ says Barry Rutenberg, chairman of the 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.’Â