Following a monthly decline in confidence, the outlook among the country’s home builders grew more optimistic. Expectations for the next six months drove the increase.
The Housing Market Index,
which is a gauge of how home builders view the single-family market, was 70 for the month of May.
Any number that is more than 50 is an indication that there are more home builders who view conditions as good than who see them as poor.
The index was jointly announced Monday by Wells Fargo and the National Association of Home Builders.
An increase in the index was noted versus the prior month, when it fell to
68.
There has been significant improvement compared to May 2016, when the index was just 58.
“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,” NAHB Chairman Granger MacDonald said in the report.
Based on a three-month moving average, a three-point increase from April 2017 left the index at 71 in the South and 49 in the Northeast. The West moved up a point to 78.
There was no change in the Midwest, where the index was 68.
One of three components to the U.S. index, sales expectations for the next six months, jumped four points from a month earlier to 79.
“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,” NAHB Chief Economist Robert Dietz stated. “Especially as existing home inventory remains tight, we can expect increased demand for new construction moving forward.”
A two-point gain left the component gauging current sales conditions at 76.
However, the component that is based on current buyer traffic slipped a point to 51.
