Builders’ confidence in the market for new single-family homes grew again as the National Association of Home Builders' housing market index climbed to 70 in May from a downwardly revised 68 in April, first reported as 69.

National Association of Home Builders' housing market index

IFR's poll of economists predicted the index would be 69.

“The solid May report shows that builders are buoyed by growing consumer demand for single-family homes,” NAHB Chairman Randy Noel said. “However, the record-high cost of lumber is hurting builders’ bottom lines and making it more difficult to produce competitively priced houses for newcomers to the market.”

Tight housing inventory, employment gains and demographic tailwinds should continue to boost demand for newly-built single-family homes,” according to NAHB Chief Economist Robert Dietz. “With these fundamentals in place, the housing market should improve at a steady, gradual pace in the months ahead.”

Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as either "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as either "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 current single-family home sales index grew to 76 from 74, the sales expectations index for the next six months remained at 77; and the traffic of prospective buyers index held at 51.

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