The National
Association of Homebuilders (NAHB) informed on Thursday that its housing market
index (HMI) declined to 34 in May from an unrevised April reading of 40. This was the
lowest reading since November 2023 (34).
Economists had expected the HMI to hold steady at 40.
A reading below
50 indicates more builders view conditions as poor than good.
According to
the report, all three major HMI
components recorded decreases in early May. The component tracking current
sales conditions tumbled by 8 points to 37, while the component measuring traffic
of prospective buyers dropped by 2 points to 23, and the component charting
sales expectations in the next six months slipped by 1 point to 42.
Commenting on
the latest report, NAHB Chairman Buddy Hughes noted that the spring home buying
season had gotten off to a slow start as persistent elevated interest rates,
policy uncertainty and building material cost factors hurt builder sentiment in
May. “However, the overwhelming majority of survey responses came before the
tariff reduction announcement with China,” he added. “Builders expect future
trade negotiations and progress on tax policy will help stabilise the economic
outlook and strengthen housing demand.”
Meanwhile, NAHB
Chief Economist Robert Dietz said that policy uncertainty stemming in large
part from the stop-and-start tariff issues had hurt builder confidence, but the
initial trade arrangements with the United Kingdom and China are a welcome
development. “Still, the overall actions on tariffs in recent weeks have had a
negative impact on builders, as 78% reported difficulties pricing their homes
recently due to uncertainty around material prices,” he added.