Builder confidence in the market for newly built, single-family homes improved for a second consecutive month in May to the highest level since September 2008, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released in May. The HMI rose two points to 16.
“Builders are responding to what they perceive to be some of the best home buying conditions of a lifetime,” said Joe Robson, NAHB chairman. “You’re not likely to get a better deal in terms of mortgage rates than what’s available right now. Combine that with the affordable prices, multitude of home choices and $8,000 tax credit for first-time buyers that are now available, and you have a very appealing set of reasons to make a move.”
“The fact that the May HMI continued to tick up from April’s five-point increase provides confirming evidence that the improved confidence level was no fluke,” said David Crowe, NAHB chief economist. “This continued increase indicates that home builders feel we’re at or near the bottom of the market and that positive signs lie ahead for builders and potential home buyers, provided that builder access to production credit significantly improves.”
Crowe also noted that recent announcements by the Department of Housing and Urban Development that would enable home buyers to use the new $8,000 tax credit at the closing table are especially encouraging.
Two out of three of the HMI’s component indexes rose in May. The index gauging current sales conditions rose two points to 14, while the index gauging sales expectations for the next six months rose three points to 27. The index gauging traffic of prospective buyers remained unchanged at 13.