Economic Snapshot: Builder confidence at second-highest level since recession

The National Association of Home Builders/Wells Fargo Housing Market Index rose two points to a level of 70 in May. This is the second-highest HMI reading since the economic downturn in 2008.

“This report shows that builders’ optimism in the housing market is solidifying, even as they deal with higher building material costs and shortages of lots and labor,” said NAHB Chairman Granger MacDonald, a homebuilder and developer from Kerrville, Texas.

Two of the three HMI components posted gains in May. The index charting sales expectations in the next six months jumped four points to 79 and the index gauging current sales conditions increased two points to 76. The component measuring buyer traffic dipped one point to 51.

“The HMI measure of future sales conditions reached its highest level since June 2005, a sign of growing consumer confidence in the new home market,” said NAHB Chief Economist Robert Dietz. “Especially as existing home inventory remains tight, we can expect increased demand for new construction moving forward.”

Looking at three-month moving averages for HMI scores, the Northeast and South each rose three points to 49 and 71, respectively, and the West rose increased one point to 78. The Midwest was unchanged at 68.

Housing starts

Privately owned housing starts were at a seasonally adjusted annual rate of 1,172,000. This is 2.6 percent below the revised March estimate of 1,203,000 but is 0.7 percent above the April 2016 rate of 1,164,000.

Single-family housing starts were at a rate of 835,000 in April. This is 0.4 percent above the revised March figure of 832,000.

Privately owned housing completions were at a seasonally adjusted annual rate of 1,106,000. This is 8.6 percent below the revised March estimate of 1,210,000 but is 15.1 percent above the April 2016 rate of 961,000.

Single-family housing completions were at a rate of 784,000 in April. This is 4.5 percent below the revised March rate of 821,000.

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