Builder confidence in the market for newly built single-family homes increased three points to 37 in May, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI).
The latest HMI survey also revealed that 32% of builders cut prices in May, down from 36% in April. The average price reduction was 6%, up from the 5% figure in April. The use of sales incentives was 61% in May, up slightly from 60% in April, and marking the 14th consecutive month this share has reached 60% or higher.
What NAHB says
“The housing market remains soft as higher mortgage rates, rising gas prices and economic uncertainty related to the war in Iran continue to dampen buyer demand,” says NAHB Chairman Bill Owens, a home builder and remodeler from Worthington, Ohio. “However, efforts in the House to modify the 21st Century ROAD to Housing Act could increase the nation’s housing supply and help ease builder concerns.”
“Recent increases for long-term interest rates will continue to hold back home buyer demand,” says NAHB chief economist Robert Dietz. “Although some regional markets, including parts of the Midwest, are showing relative strength, the housing market continues to face significant affordability challenges.”