After a Dip, Homebuilder Sentiment Surges Again

The nation’s homebuilders are feeling far better again, after an unusually warm winter wreaked havoc with the usual traffic and sales trends. Builder confidence jumped five points in May on the National Association of Home Builders’ sentiment index, after dropping four points in April.

AP

“Builders in many markets are reporting that buyer traffic and sales have picked back up after a pause this April,” said NAHB chairman Barry Rutenberg in a release.

The index now stands at 29. Fifty is the line between positive and negative sentiment.

Builder confidence had been rising steadily throughout the fall and winter, with the exception of the April blip. While the two components of the index measuring buyer traffic and current sales surged strongly, sales expectations over the next six months were not quite as bullish, although still in the positive.

“The pace of this emerging recovery could be stronger were it not for the significant impediments that the market continues to face with regard to builder and consumer access to credit, inaccurate appraisals, and more recently, rising materials prices,” notes NAHB Chief Economist David Crowe.

On the flip side, affordability has never been better. A report just released from the National Association of Realtors shows its quarterly “Housing Affordability Index” rising to a record high in the first three months of this year.

It is also the first time the index broke the 200 market since record keeping began in 1970. Again, it comes with a caveat:

“Although home prices are stabilizing and sales are rising, some buyers still have to jump through a lot of hoops to convince a lender that they are creditworthy, even for a mortgage that would be well within their means,” notes NAR president Moe Veissi in a Tuesday’s release.

The index shows that the median income family, earning just under $61,000, could afford a home costing $325,000, which is more than double the national median existing home price. Newly constructed homes are more costly, but builders are helping with financing and continued incentives.

Home builder sentiment rose most strongly in the Northeast, and more modestly in the South and Midwest. Only the West region saw a drop in builder confidence.

Questions? Comments? [e-mail] follow me on Twitter @Diana_Olick