The National Association of Home Builders (NAHB) and Wells Fargo will release its latest housing market index (HMI) on Monday, June 17.
May’s HMI [1]increased to a seven-month high of 66, which is a slight increase from 63 the prior month, and was above expectations.
“Builders are busy catching up after a wet winter and many characterize sales as solid, driven by improved demand and ongoing low overall supply,” said NAHB Chairman Greg Ugalde, a home builder and developer from Torrington, Connecticut. “However, affordability challenges persist and remain a big impediment to stronger sales.”
“Mortgage rates are hovering just above 4 percent following a challenging fourth quarter of 2018 when they peaked near 5 percent. This lower-interest rate environment, along with ongoing job growth and rising wages, is contributing to a gradual improvement in the marketplace,” said NAHB Chief Economist Robert Dietz. “At the same time, builders continue to deal with ongoing labor and lot shortages and rising material costs that are holding back supply and harming affordability.”
The latest HMI found that 61% of new and existing homes were deemed affordable [2]. The current homeownership rate of 64.2% remains below the 25-year average of 66.3%, according to the U.S. Census Bureau’s Housing Vacancy Survey.
The HMI posted increases in all areas for May. Current sales conditions rose three points to 72, component gauging expectations in the next six months edged one point higher to 72, and the buyer traffic moved up two points to 49.
According to the NAHB, the Northeast posted a six-point gain on its HMI score to 57, the West increased by two points to 71, and the Midwest gained just one point to 54. The South also saw an increase, rising one point to 68.
Here's what else is happening in The Week Ahead:
Census Bureau New Residential Construction survey (June 18)
Census Bureau Housing Starts (June 18)
Federal open Market Conference (June 18)
Existing Home Sales (June 21)