TRD Insights: Homebuilder confidence rebounded in May

National Association of Homebuilders index had plunged in April

(Credit: iStock)
(Credit: iStock)

Homebuilder confidence in May improved from horrible to merely bad.

The National Association of Homebuilders/Wells Fargo preliminary Housing Market Index rebounded to 37 in May after plunging in April to 30 in its sharpest single-month drop ever. Homebuilder confidence is considered negative when the index falls below 50.

The index was lower in the Northeast, which has the most coronavirus-related deaths in the country and where officials have taken more stringent measures to curb the pandemic. Confidence there continued searching for rock bottom, declining two points in May to 17. In all other regions, the index climbed by at least seven points.

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The NAHB index is also broken down into three components. Homebuilders’ confidence in the single-family home market increased to 42 in May from 36 last month. Looking ahead, prospects are rosier. Confidence in that market six months from now increased to 46 from 36 last month. The third component, prospective buyer traffic, gained but remained abysmal, increasing to 21 from its April level of 13.

The NAHB housing index is based on a monthly survey of homebuilders. It is meant to check the temperature of homebuilder confidence in the single-family market.

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