Builders’ confidence hesitated slightly in May as the NAHB/Wells Fargo Housing Market Index dropped two points to 54. The April-May average remains at the same level as the first quarter average suggesting nothing has changed significantly for the first five months of 2015. Builders continue to express concern that consumers remain tentative on their judgement of present and future economic conditions. Consumers demand prices below costs and are concerned about selling their existing home. First-time buyers still constitute about half their normal share of new home purchases.
On the more positive side, the component measuring future demand rose one point to 64, the highest in 2015 as builders do continue to see a better future. Low rates and pent up demand support the attitude. Inventories of new homes have risen since the bottom in mid-2012 and stand at their highest level since spring 2010. The index component measuring current sales dropped two point to 59 but remained well above the tipping point of 50.
Regionally, the three month moving average increased in two regions: the Midwest up one point to 55 and the South up one point to 57. The Northeast fell one point to 41 and the West dropped three points to 55.