Homebuilder Confidence Unchanged In May, Misses Consensus

Tyler Durden's picture

Hopefully the latest confirmation of the housing triple dip will not come as a surprise to anyone: “Builder
confidence has hardly budged over the past six months as persistent
concerns regarding competition from distressed property sales, lack of
production credit, inaccurate appraisals, and proposals to reduce
government support of housing have continued to cloud the outlook,” said
NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. “In addition,
many builders in this month’s survey cited high gas prices as a further
contributor to consumer anxiety and reluctance to go forward with a
home purchase.” As a result, NAHB builder confidence remained at 16 in May, despite hopes and prayers that after six months at this low level for 6 months in a row.

From the NAHB press release:

Builder confidence in the market for newly built,
single-family homes held unchanged at the low level of 16 in May,
according to the National Association of Home Builders/Wells Fargo
Housing Market Index (HMI), released today. The index has now remained
at this level for six out of the past seven months. 

“Builder
confidence has hardly budged over the past six months as persistent
concerns regarding competition from distressed property sales, lack of
production credit, inaccurate appraisals, and proposals to reduce
government support of housing have continued to cloud the outlook,” said
NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. “In addition,
many builders in this month’s survey cited high gas prices as a further
contributor to consumer anxiety and reluctance to go forward with a
home purchase.” 

“The HMI component index measuring traffic of
prospective buyers increased by one point for the second time this year
as prospective buyers show growing interest but remain extremely
hesitant due to a number of factors,” said NAHB Chief Economist David
Crowe. “Asked to identify reasons that potential customers are holding
back at this time, 90 percent of builders surveyed said clients are
concerned about being able to sell their existing home at a favorable
price, while 73 percent said consumers think it will be difficult for
them to get financing. Clearly, access to credit for both builders and
buyers remains a considerable obstacle to the revival of the new-homes
market.” 

Derived from a monthly survey that NAHB has been
conducting for more than 20 years, the NAHB/Wells Fargo Housing Market
Index gauges builder perceptions of current single-family home sales and
sales expectations for the next six months as “good,” “fair” or “poor.”
The survey also asks builders to rate traffic of prospective buyers as
“high to very high,” “average” or “low to very low.” Scores from each
component are then used to calculate a seasonally adjusted index where
any number over 50 indicates that more builders view sales conditions as
good than poor. 

Both the index gauging current sales conditions
and the index gauging traffic of prospective buyers inched up one point
in May, to 16 and 14, respectively. While still very low, the traffic
gauge is now at its highest point since May of 2010. Meanwhile, the
index gauging sales expectations in the next six months declined two
points to 20 in May. 

Regionally, the HMI results were mixed, with
the Northeast posting a 5-point decline to 15, the Midwest posting no
change at 14, the South posting a one-point gain to 16, and the West
posting a two-point decline to 16.