Builder sentiment increased five points to 50 in May and is the first positive reading since July 2022; anything below 50 is considered negative for the National Association of Home Builders’ monthly survey, according to CNBC. It reached a record high of 90 in November 2020.
The increase marks the fifth straight month of gains for the NAHB/Wells Fargo Housing Market Index. The index was at 69 in May 2022.
Of the homebuilder index’s three components, sales expectations in the next six months increased seven points to 57; current sales conditions rose five points to 56; and buyer traffic rose two points to 33.
“New home construction is taking on an increased role in the marketplace because many homeowners with loans well below current mortgage rates are electing to stay put, and this is keeping the supply of existing homes at a very low level,” said NAHB Chairman Alicia Huey.
Twenty-seven percent of builders reported cutting prices in May, which is down from 30% in April. Fifty-four percent of builders are using incentives compared with 59% in April and 62% in December 2022.
