Home-Builder Confidence Index Hits 5-Year High

A national index that measures builders’ confidence in the market for newly built, single-family homes gained five points this month, its strongest reading since May of 2007.
The National Association of Home Builders/Wells Fargo index reached 29 in May.  Any number over 50 indicates more builders view conditions as positive than poor.
Three out of four regions registered improving builder sentiment in May. This included a six-point gain to 32 in the Northeast, and five-point gains to 27 and 28 in the Midwest and South, respectively. The West posted a two-point decline, to 29.
“Builders in many markets are reporting that buyer traffic and sales have picked back up after a pause this April,” said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla. “It seems we have resumed the gradual upward trend in confidence that started at the beginning of this year, as stabilizing prices and excellent affordability encourage more people to pursue a new-home purchase.”
However, the pace of this recovery in home construction could be stronger if it were not for “significant impediments,” including builder and consumer access to credit, inaccurate appraisals, and more recently, rising materials prices, said NAHB Chief Economist David Crowe.
Nonetheless, the component gauging current sales conditions and the component gauging traffic of prospective buyers each rose five points in May to 30 and 23, respectively, with the traffic component hitting its highest level since April of 2007.

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