Market confidence is positive for the first time in nearly a year.
Builder confidence in the market for newly built single-family homes rose five points to 50 in May, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI).
This marks the first time since July 2022 that sentiment levels have reached 50 and the fifth straight month that builder confidence has increased. The lack of existing homes for sale seems to be the biggest contributor behind the sentiment boost, even offsetting high mortgage and interest rates as well as supply challenges.
“Lack of existing inventory continues to drive buyers to new construction,” said NAHB chief economist, Robert Dietz.
Incentives for buying new construction such as mortgage rate buydowns and lowered pricing for extras seem to be winding down as demand grows. In December it was reported that 62% of builders were offering some kind of sales incentive; that number is down to 54% in May.
Regionally, on a three-month moving average, builder sentiment in the Midwest rose 2 points to 39. It increased 3 points to 52 in the south, increased 3 points to 41 in the west and remained unchanged at 45 in the Northeast.