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Home Builders Stay Confident

Builder confidence in the housing market rises as demand for newly-built, single-family homes rose two points, achieving a total of 70 out of 100, this May, according to the National Association of Homebuilders (NAHB)/Wells Fargo Housing Market Index (HMI).

Based on a monthly survey from the NAHB, the HMI measures the health of the housing market on a point system from 0 to 100 based on three factors. The survey asks participants to rate market conditions for the sale of new, single-family homes at present, the market conditions for the sale of new, single-family homes in the next six months, and the traffic of prospective buyers of new homes.

The first two queries are rated as “good,” “fair,” or “poor,” while traffic of prospective buyers is rated as “high to very high,” “average,” or “low to very low.” By applying the formula “(Good-Poor+100)/2” to the present and future sales sets and “(High/Very High–Low/Very Low + 100)/2” to the buyers traffic set, one may find three separate indices, the weighted average of which is the final HMI. Any number over 50 indicates that more builders view conditions as good than poor.

Although, builders confidence scored an overall total of 70, breaking down the data, consumers rated sales expectations currently at 76 and sales expectations in the next six months at 79. However, buyer traffic was rated relatively low at 51.

With a score of 70, the HMI signals growing consumer confidence in the new home market, according to the NAHB. However, there are still issues concerning lots and labor shortages, as well as over increasing building material costs.

In three out of four regions, the HMI posted gains in the three-month moving averages, according to reported data. The Northeast, West and South scored 49, 78, and 71, respectively, while the Midwest remained the same as last month at 68.

About Author: Seth Welborn

Seth Welborn is a contributing writer for DS News. He is a Harding University graduate with a degree in English and a minor in writing, and has studied abroad in Athens, Greece. An East Texas native, he also works part-time as a photographer.
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