For the first time in five months, the nation’s home builders felt more confident about conditions in the new home market. Current sales conditions were behind the improvement.
The Housing Market Index, a measurement of home builders’ current perceptions of single-family home sales and expectations, was 70 as of May.
When an index is more than 50, it means that there are more builders who view current conditions as good than those who view them as poor.
The National Association of Home Builders, which jointly produces the index with Wells Fargo, reported the latest index on Tuesday.
Compared to the upwardly revised level for the preceding month, the index was up two points — marking the first increase since December 2017. The index was up a point from May 2017.
“The solid May report shows that builders are buoyed by growing consumer demand for single-family homes,” NAHB Chairman Randy Noel said in an accompanying announcement. “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.”
On a three-month moving average, the index was 76 in the West and 55 in the Northeast, no different than in April.
The South’s index fell a point to 72 as of this month, while the Midwest was off a point to 65.
Three components comprise the national index. The component that measures buyer traffic was 51, no different than a month earlier. The index reflecting current sales conditions rose two points from a month earlier to 76, and the index gauging sales expectations over the next six months was unchanged at 77.
