Builder Confidence Moves Up in May

Builder confidence was up in May, according to the National Association of Home Builders/Wells Fargo Housing Market Index, which gained five points for the month, bringing the index to a reading of 29. The gain was somewhat tempered, however, by a one-point downward revision to April’s reading. "While home building still has quite a way to go toward a fully healthy market, the fact that the HMI has returned to trend is an excellent sign that firming home values, improving employment, and low mortgage rates are drawing consumers back," said David Crowe, the NAHB’s chief economist, in a released statement today. "The pace of this emerging recovery could be stronger were it not for the significant impediments that the market continues to face with regard to builder and consumer access to credit, inaccurate appraisals, and more recently, rising materials prices." The index, for which any reading under 50 indicates that a majority of builders still see conditions as poor rather than good, saw upward movement in each of its three components. The components gauging current sales conditions and prospective buyer traffic rose five points each, to readings of 30 and 23, respectively. The component measuring sales expectations in the next six months was up three points to a reading of 34.

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