Confidence Slips But Housing Jumps
Housing starts surged more than 20 percent in April, suggesting that earlier projections for increased home construction this year are on track. Builder confidence dropped to points in May, to 54, but remains in positive territory and nine points higher than a year ago, according to the NAHB.
Nationwide housing starts rose 20.2 percent to a seasonally adjusted annual rate of 1.135 million units. This is the highest level of housing production since November 2007. Single-family housing starts increased 16.7 percent to a seasonally adjusted annual rate of 733,000 in April while multifamily starts rose 27.2 percent to 402,000 units.
“Our builders tell us that consumers are slowly returning to the market,” said NAHB Chairman Tom Woods, a home builder from Blue Springs, Mo. “This month’s report shows release of pent-up demand and evidence of a sustainable housing recovery.”
Builder confidence in the market for newly built, single-family homes in May dropped two points to a level of 54 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). “Despite this month’s slight dip, builder confidence in the new home market remains above the 50-point benchmark,” said Woods. “Overall, the second quarter of 2015 is shaping up to be very solid.”
“Consumers are exhibiting caution, and want to be on more stable financial footing before purchasing a home,” said NAHB Chief Economist David Crowe. “On the bright side, the HMI component measuring future sales expectations has been tracking upward all year, mortgage rates remain low, and house prices are affordable. These factors should spur the release of pent-up demand moving forward.
“The April gains (in housing starts) make up for the production dips we saw in the past two months, but single-family housing is still only about halfway back to what could be considered a normal market,” said NAHB Chief Economist David Crowe. “With low interest rates and affordable home prices, we expect more upward momentum in the months ahead.”
Find the NAHB's complete news releases on housing here and on builder confidence here.
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