Home Builder Expectations Continue to Improve After Tax Credit Expiration

While this was the best read in more than two years, it's hard to overlook how weak builder confidence is relative to historical standards. To be clear, the Home Price Index is not far from record low levels. Photo Courtesy of Reuters

Derived from a monthly survey, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations.

Builder confidence in the market for newly built, single-family homes rose for a second consecutive month in May to its highest point since August 2007. The Housing Market Index (HMI) gained three points to 22 in May. Confidence is growing in the building market but still has a long road to recovery, along with the landscape industry.

Each of the HMI's three component indexes posted three-point gains in May. The component gauging current sales conditions climbed to 23, its highest level since July of 2007. The component gauging sales expectations in the next six months rose to 28, its highest point since November 2009. The component gauging traffic of prospective buyers improved to 16, its best showing since September 2009.

The HMI also posted gains in every region in May. The Northeast, which has the smallest survey sample and is therefore subject to greater month-to-month volatility, rose 14 points to 35, its highest point since June of 2007. The Midwest posted a two-point gain to 17, while the South registered a one-point gain to 22, and the West posted a seven-point gain to 20.

- Courtesy of Mortgage News Daily