Home Builder Confidence Remains Below Par

The National Association of Home Builders (NAHB)/WellsrnFargo Housing Market Index (HMI) fell one point in May to 45 from the April readingrnwhich was revised from 47 to 46.  The HMIrnis a measure of home builder confidence in the new home market and it hasrnremained under 50 since February, indicating that more builders view marketrnconditions as unfavorable than view them as good.</p

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NAHB Chairman Keven Kelly spoke about the HMI’srnrecent negative stability. “Afterrnfour months in which the HMI has shown little signs of fluctuation, it is clearrnthat builder sentiment is becoming more in line with the market reality of a continuingrnbut modest recovery.  However, buildersrnexpressed some optimism that sales will pick up in the coming months.”</p

“Builders are waiting for consumersrnto feel more secure about their financial situation,” NAHB Chief EconomistrnDavid Crowe said. “Once job growth becomes more consistent, consumers willrnreturn to the market in larger numbers and that will boost builder confidence.”</p

NAHB conducts its monthly surveyrnamong its new home builder members asking them for their perceptions of currentrnsingle-family home sales and their expectations for sales over the next sixrnmonths as “good,” “fair” or “poor.” rnBuilders are also asked to rate current prospective buyer traffic as “highrnto very high,” “average” or “low to very low.” rnThe responses to each question are used to construct individual 100rnpoint indices and a composite (the HMI). rn</p

The index’s components were mixed inrnMay. The component gauging sales expectations in the next six months rose onernpoint to 57 and the component measuring buyer traffic increased two points torn33. The component gauging current sales conditions fell two points to 48.</p

Looking at the three-month movingrnaverages for regional HMI scores, the South rose one point to 48 while thernMidwest fell a single point to 47 and the West posted a four-point drop to 47.rnThe Northeast held steady at 33.

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