Builders’ confidence in the market for new single-family homes held steady, as the National Association of Home Builders’ housing market index — a monthly gauge of builder sentiment — stayed at 16 in May, unchanged from April.
Thomson Reuters’ poll of economists predicted a level of 17.
“Builder confidence has hardly budged over the past six months as persistent concerns regarding competition from distressed property sales, lack of production credit, inaccurate appraisals, and proposals to reduce government support of housing have continued to cloud the outlook,” according to board chairman Bob Nielsen.
“In addition, many builders in this month’s survey cited high gas prices as a further contributor to consumer anxiety and reluctance to go forward with a home purchase,” he said.
“The HMI component index measuring traffic of prospective buyers increased by one point for the second time this year as prospective buyers show growing interest but remain extremely hesitant due to a number of factors,” said board chief economist David Crowe.
“Asked to identify reasons that potential customers are holding back at this time, 90% of builders surveyed said clients are concerned about being able to sell their existing home at a favorable price, while 73% said consumers think it will be difficult for them to get financing,” Crowe added.
“Clearly, access to credit for both builders and buyers remains a considerable obstacle to the revival of the new-homes market,” he said.
Derived from a monthly survey that the board has been conducting for more than 20 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.
Two of the three component indexes rose in May.
The current single-family home sales index climbed to 16 from 15, and the sales expectations index for the next six months slumped to 20 from 22. The traffic of prospective buyers index crept to 14 from 13.