Builder sentiment decreased six points to 34 in May; anything below 50 is considered negative for the National Association of Home Builders’ monthly survey, according to NAHB. It reached a record high of 90 in November 2020.
Regarding the three components of the homebuilder index, current sales conditions fell eight points to 37; buyer traffic decreased two points to 23; and sales expectations fell one point to 42.
Thirty-four percent of builders reported cutting prices in May compared with 29% in April. The average price discount remained at 5% for the month. Sixty-one percent of builders were using sales incentives other than price cuts to improve sales in May, which is the same rate as in April.
“The spring home buying season has gotten off to a slow start as persistent elevated interest rates, policy uncertainty and building material cost factors hurt builder sentiment in May,” said NAHB Chairman Buddy Hughes. “However, the overwhelming majority of survey responses came before the tariff reduction announcement with China. Builders expect future trade negotiations and progress on tax policy will help stabilize the economic outlook and strengthen housing demand.”
