U.S. homebuilders are expecting stronger sales ahead, but mortgage applications for newly built homes don't currently support that hope.
After slipping in April, homebuilder sentiment rose 2 points in May to the second-highest level since the recession. Sentiment now stands at 70 on a monthly index from the National Association of Home Builders. Anything above 50 is considered positive sentiment. The index was at 58 in May of last year.
"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.
Of the index's three components, sales expectations over the next six months saw the biggest gain, rising 4 points to 79. That is the highest level since June 2005. Current sales conditions also rose 2 points to 76. The components measuring buyer traffic, however, fell 1 point to 51.