Builders' confidence in the market for new single-family homes fell as the National Association of Home Builders' housing market index — a monthly gauge of builder sentiment — slipped to 45 in May from a revised 46 in April, first reported as 47.
Thomson Reuters' poll of economists predicted the index would be 49.
"After four months in which the HMI has shown little signs of fluctuation, it is clear that builder sentiment is becoming more in line with the market reality of a continuing but modest recovery," NAHB Chairman Kevin Kelly said. "However, builders expressed some optimism that sales will pick up in the coming months."
"Builders are waiting for consumers to feel more secure about their financial situation," according to NAHB Chief Economist David Crowe. "Once job growth becomes more consistent, consumers will return to the market in larger numbers and that will boost builder confidence."
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 dropped to 48 from 50, the sales expectations index for the next six months climbed to 57 from 56; and the traffic of prospective buyers index rose to 33 from 31.
