Nation's Building News Online

Builders Regain Their Former Optimism in May

Buoyed by a further downshift in mortgage interest rates and improving consumer confidence, builders are taking a far rosier view of the housing market today than they did earlier this year when the prognosis for the industry was clouded by severe winter weather and a war against the Iraqi government.

NAHB’s Housing Market Index (HMI) last week rose four points, to 56, for the month of May, as builders voiced optimism in their assessments of current sales of new single-family homes, sales expectations for the next six months and the traffic of prospective home buyers.

“The spring home buying season is underway and builders are encouraged by the strong demand they are seeing,” said NAHB President Kent Conine. “People are now going forward with home buying decisions they may have postponed in previous months.”

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NAHB Chief Economist David Seiders noted that the availability and cost of lots is an ongoing concern in many markets, but “builders are solidly optimistic about being able to sell homes that are getting built,” and their sales expectations are back to where they were at the start of this year.

Seiders added that he is now forecasting that new-home sales and starts this year “will be essentially on par with last year’s solid numbers.”

The HMI is derived from a monthly survey of builders that NAHB has been conducting for nearly 20 years. Any number over 50 indicates that more builders view sales conditions as good than poor.
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