The May NAHB home builder sentiment index improved by 7 pts m/o/m to 37 and that was 2 pts above the estimate but still about half the 72 print in March. Present Conditions rose 6 pts to 42 from April and compares with 79 in March. Future Expectations were up by 10 pts m/o/m to 46 and compares with 75 in March. Prospective Buyers Traffic rose to 21 from 13 and vs 56 in the month prior. Keep in mind that 50 is the breakeven level between growth and contraction.
The NAHB said “The fact that most states classified housing as an essential business during this crisis helped to keep many residential construction workers on the job, and this is reflected in our latest builder survey.” Also, “Low interest rates are helping to sustain demand.” The caveat to all of this though: “high unemployment and supply side challenges including builder loan access and building material availability are near term limiting factors.” Figure that out these two factors and the housing industry will follow.
What could also help the new home construction market is the still limited supply of existing homes and in this current covid time, people are much less inclined to be moving out of existing homes. Lastly, will the living habits of urban residents begin to switch to wanting the suburban life style?
NAHB BUILDER SURVEY