Optimism for Sales Prospects Propels U.S. Homebuilder Sentiment

More confidence among U.S. home builders this month shows the industry remains optimistic demand will keep growing in the face of rising property values, according to data Monday from the National Association of Home Builders/Wells Fargo.

Highlights of Homebuilder Sentiment (May)
  • Builder sentiment rose to 70, the second-highest since 2005, from 68 in April
  • Median forecast in a Bloomberg survey was for 68; readings greater than 50 indicate more respondents reported good market conditions
  • Measure of six-month sales outlook climbed to 79, the highest level since June 2005, from 75

Key Takeaways

A pickup in current sales is keeping builders upbeat about the market’s prospects over the next six months. Lean inventory of previously owned properties is encouraging some interested buyers to look at the new-home market. Greater demand is also helping allay builder concerns about higher costs for building materials and shortages of labor and lots. Stronger sales and construction would help provide more of a push for the economy. Builder sentiment has climbed since the November election on hopes of reduced regulatory burdens.

Other Details

  • Index of current sales rose to 76 this month from 74
  • Confidence advanced in three of four regions, including the West and South
  • Builder sentiment eased to a three-month low in the Midwest
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