
May Home Builder Sentiment Holds Steady
The National Association of Home Builders said builder confidence in the market for newly built single-family homes in May remained unchanged for the fourth consecutive month.
The NAHB/Wells Fargo Housing Market Index registered at 58. The Index 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 components measuring sales expectations in the next six months increased three points to 65, while the component charting current sales conditions and the index gauging buyer traffic both held steady at 63 and 44, respectively.
The three-month moving averages for regional HMI scores saw the South and Midwest show one-point gains to 59 and 58, respectively. The West remained unchanged at 67 and the Northeast fell three points to 41.
Mark Vitner, senior economist with Wells Fargo Securities, Charlotte N.C., said the uptick in outlook for future sales bodes well for home sales in the coming months.
“May is one of the most important months for home builders,” Vitner said. “While the overall NAHB HMI was unchanged, the improvement in the leading future sales component is encouraging.”
“The fact that future sales expectations rose slightly this month shows that builders are confident that the market will continue to strengthen,” said NAHB Chief Economist Robert Dietz. “Job creation, low mortgage interest rates and pent-up demand will also spur growth in the single-family housing sector moving forward.”
Last week, Mortgage Bankers Association Builder Application Survey data for April show mortgage applications for new home purchases decreased by 11 percent from March. MBA Vice President of Research and Economics Lynn Fisher said historical patterns suggest the April decline resulted from strong application activity in February and March.
By product type, MBA said conventional loans composed 67.8 percent of loan applications, FHA loans composed 18.3 percent, RHS/USDA loans composed 0.6 percent and VA loans composed 13.3 percent. The average loan size of new homes decreased from $328,898 in March to $325,233 in April.