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News » US » Confidence in building market rises » published 15 May 2018

Confidence in building market rises

Builders’ confidence in the market for newly-built single-family homes rose in May despite concerns about the rising cost of lumber.

The May reading on the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) rose two points to 70 in May after a downwardly revised April. It is the fourth time the HMI has reached 70 or higher this year.

“The solid May report shows that builders are buoyed by growing consumer demand for single-family homes,” said NAHB chairman Randy Noel. “However, the record-high cost of lumber is hurting builders’ bottom lines and making it more difficult to produce competitively priced houses for newcomers to the market.”

NAHB chief economist Robert Dietz added: “Tight housing inventory, employment gains and demographic tailwinds should continue to boost demand for newly-built single-family homes. With these fundamentals in place, the housing market should improve at a steady, gradual pace in the months ahead.”

The index is derived from a monthly survey that NAHB has been conducting for 30 years. It 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 for 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.

The HMI chart gauging current sales conditions increased two points to 76 in May while the indexes measuring buyer traffic and expectations in the next six months remained unchanged at 51 and 77, respectively.

Looking at the three-month moving averages for regional HMI scores, the West and Northeast held steady at 76 and 55, respectively. Meanwhile, the South and Midwest each edged down one point to respective levels of 72 and 65.

 

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This article was published on 15 May 2018 (last updated on 21 May 2018).

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