Builder sentiment climbed three points to 37 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 rose three points to 40; sales expectations climbed three points to 45; and buyer traffic increased three points to 25.
Thirty-two percent of builders reported cutting prices in May compared with 36% in April, 37% in March and 36% in February. The average price discount was 6%, which is up from 5% in April. Sixty-one percent of builders were using sales incentives other than price cuts to improve sales in May, which is up from 60% in April; this marks the 14th consecutive month the use of sales incentives has exceeded 60%.
“Recent increases for long-term interest rates will continue to hold back home buyer demand,” said 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.”
