NEW YORK - Builders’ confidence in the market for new single-family homes declined as the National Association of Home Builders' housing market index - a monthly gauge of builder sentiment – surged to 29 in April from 25 in April.
Thomson Reuters' poll of economists predicted the index would be 26.
“Builders in many markets are reporting that buyer traffic and sales have picked back up after a pause this April,” said NAHB Chairman Barry Rutenberg.
“While home building still has quite a way to go toward a fully healthy market, the fact that the HMI has returned to trend is an excellent sign that firming home values, improving employment and low mortgage rates are drawing consumers back,” NAHB Chief Economist David Crowe said. “The pace of this emerging recovery could be stronger were it not for the significant impediments that the market continues to face with regard to builder and consumer access to credit, inaccurate appraisals, and more recently, rising materials prices.”
Derived from a monthly survey that NAHB 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.
All three component indexes increased in May. The current single-family home sales index jumped to 30 from 25, and the sales expectations index for the next six months grew to 34 from 31. The traffic of prospective buyers index increased to 23 from 18, its highest level since April 2007.