Builder Confidence Spikes in May

After seeing the largest drop in a month in April since the creation of the index 30 years ago, builder confidence bounced back up seven points in May, the National Association of Home Builders reported.

The NAHB/Wells Fargo Housing Market Index showed builder confidence reached 37, after dropping to 30 in April. Comparatively, builder confidence was at 72 in early March. The survey asks builders to rate current single-family home sales, sales expectations for the next six months and the traffic of potential buyers.

“Builders are showing flexibility in this new business environment by making sure buyers have the knowledge and access to the homes they are seeking through innovative measures such as social media, virtual tours and online closings,” said NAHB Chairman Dean Mon.

NAHB’s chief economist Robert Dietz remarked that low interest rates are pushing the demand for homes, but challenges amidst the COVID-19 pandemic will remain.

“As many states and localities across the nation lift stay-at-home orders and more furloughed workers return to their jobs, we expect this demand will strengthen,” said Dietz. “Other indicators that suggest a housing rebound include mortgage application data that has posted four weeks of gains and signs that buyer traffic has improved in housing markets in recent weeks. However, high unemployment and supply-side challenges including builder loan access and building material availability are near-term limiting factors.”

The Northeast was the only region to report a drop in confidence, dropping two points to 17, while the West rose 12 points to 44, the Midwest gained seven points to reach 32 and the South increased eight points to hit 42.The NAHB/Wells Fargo Housing Market Index showed builder confidence reached 37, after dropping to 30 in April.