U.S. builder confidence remains unchanged in May, as expected

The National Association of Homebuilders (NAHB) announced on Monday its housing market index (HMI) stood at 83 in May, unchanged from 83 in April.

Economists had forecast the HMI to remain at 83.

A reading over 50 indicates more builders view conditions as good than poor.

The three HMI components were mixed this month. The indicator gauging current sales conditions held steady at 88, while the component measuring traffic of prospective buyers decreased 1 point to 73 and the measure charting sales expectations in the next six months went up 1 point to 81.

NAHB Chairman Chuck Fowke noted: “Builder confidence in the market remains strong due to a lack of resale inventory, low mortgage interest rates, and a growing demographic of prospective home buyers. However, first-time and first-generation home buyers are particularly at risk for losing a purchase due to cost hikes associated with increasingly scarce material availability.”

Meanwhile, NAHB Chief Economist Robert Dietz noted: “Low-interest rates are supporting housing affordability in a market where the cost of most materials is rising. In recent months, aggregate residential construction material costs were up 12% year over year, and our surveys suggest those costs are rising further. Some builders are slowing sales to manage their own supply chains, which means growing affordability challenges for a market in critical need of more inventory.” With labor and lot availability a challenge in many markets, Dietz cautioned that “home buyers should expect rising prices throughout 2021 as the cost of materials, land and labor continue to rise.”