Builder Confidence Stays Strong And Steady In May

May 17, 2005

The nation’s home builders continue to maintain the high level of confidence that they have expressed for more than 16 months, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released today.

Robust buyer demand for new single-family homes, brought on by continued low mortgage rates and an improving job market, nudged builder confidence up three points to 70 on a seasonally adjusted annual basis, close to the high side of the strong 67-71 confidence range that builders have held for more than a year.

“Builders have seen an uptick in traffic and sales brought on by improving economic conditions and mortgage rates that continue to remain at affordable levels. They have confidence in the overall housing market and expect sales to stay strong for the next six months,” said NAHB President Dave Wilson, a custom home builder from Ketchum, Idaho.

“Builders obviously continue to see strong buyer demand for single-family homes,” said NAHB Chief Economist David Seiders. “With unsold inventories in good shape, housing starts should be solid in coming months.”

The NAHB/Wells Fargo Housing Market Index (HMI) is derived from a monthly survey of builders that NAHB has been conducting for nearly 20 years. Each month, builders report current sales of single-family homes and prospects for sales in the next six months as either “good,” “fair” or “poor.” They also 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 sales conditions as good than poor.

The component index gauging current single-family sales rose three points to 76 while the component index gauging sales expectations for the next six months and the component gauging traffic of prospective buyers were 77 and 53, respectively.

Source: NAHB

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