Builder confidence in the market for newly-built single-family homes continued to grow in May to the second-highest level since the Great Recession, as tracked by the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI).
The HMI reached a score of 70, up two points from the April HMI reading, NAHB said. “The HMI measure of future sales conditions reached its highest level since June 2005, a sign of growing consumer confidence in the new home market,” said NAHB Chief Economist Robert Dietz. “Especially as existing home inventory remains tight, we can expect increased demand for new construction moving forward.”
The HMI tracks builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor”; readings over 50 indicate more builders see conditions as good than poor.
Within the components of the HMI, sales expectations over the next six months rose four points to 79, NAHB said. The index gauging current sales expectations climbed two points to 76. The buyer traffic index, on the other hand, fell a point to 51.
Three of the four regions tracked over three-month moving averages in the HMI saw gains. The Midwest remained unchanged.
“This report shows that builders’ optimism in the housing market is solidifying, even as they deal with higher building material costs and shortages of lots and labor,” said NAHB Chairman Granger MacDonald, a home builder and developer from Kerrville, TX.
– Nicholas Stern, senior editor