By Emon Reiser
Confidence among U.S. home builders improved in May for a fifth consecutive month, as limited inventory encouraged new construction, despite supply-chain disruptions and tightening credit conditions for construction loans, according to data from the National Association of Home Builders Tuesday. Here are the report’s main takeaways:
–The NAHB’s housing-market index, which gauges the single-family housing market, increased to 50 in May from 45 in April. The reading, which reached the midpoint mark for the first time since July, suggests that more builders view conditions as average.
–The reading beat expectations from economists polled by The Wall Street Journal, who estimated 46.
–New home construction is taking on an increased role in the marketplace because many home owners 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, NAHB Chairman Alicia Huey said.
–Lack of existing inventory continues to drive buyers to new construction, with a third of homes listed for sale in March in various stages of construction, NAHB’s chief economist Robert Dietz said.
–With limited available housing inventory, new construction will continue to be a significant part of prospective buyers’ search in the quarters ahead, Mr. Dietz added.
–“While this is fueling cautious optimism among builders, they continue to face ongoing challenges to meet a growing demand for new construction. These include shortages of transformers and other building materials and tightening credit conditions for residential real estate development and construction brought on by the actions of the Federal Reserve to raise interest rates,” Ms. Huey said.
–The index measuring current sales conditions rose to 56 in May from 51 a month earlier, while sales expectations in the next six months rose to 57 from 50. The measure gauging traffic of prospective buyers rose as well to 33 from 31.
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