Advertisement
What really powers the cloud? Behind every Google search, A...
A lot of what defines a home isn’t visible at handover. I...
Private equity has played a significant role in shaping Indi...
Luxury real estate is one of the most talked-about segments ...
Airports play a much bigger role than just enabling travel -...
• U.S. home builder sentiment rose slightly in May, with the NAHB/Wells Fargo Housing Market Index increasing to 37 from 34 in April, though it remained below the neutral 50-mark for the 25th consecutive month.
• Higher mortgage rates, inflation and economic uncertainty linked to the Iran conflict continued to affect homebuyer demand and overall housing market activity.
• Builders continued offering discounts and incentives to support sales, with 32% reducing prices in May and 61% using sales incentives.
• Indicators tracking current sales conditions, future sales expectations and buyer traffic showed modest improvement during the month.
• The broader U.S. housing market remained weak, with existing home sales staying near crisis-era levels and building permit data pointing to uncertain future construction activity.
U.S. home builder sentiment recorded a modest rise in May, but the overall outlook for the housing market continued to remain weak as elevated mortgage rates and affordability concerns kept buyer demand under pressure. Advertisement
The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index increased to 37 in May from 34 in the previous month. Despite the improvement, the index has remained below the neutral 50-mark for 25 straight months, indicating that most builders still view market conditions negatively. Economists surveyed by Reuters had expected the index to remain unchanged.
The housing sector has been facing persistent pressure from higher borrowing costs and inflation, which have intensified following the conflict involving Iran. Rising oil prices have added to inflation concerns, pushing up yields on U.S. Treasury securities that influence mortgage rates. As a result, home loan costs have climbed again after briefly easing earlier this year.
NAHB Chairman Bill Owens stated that higher mortgage rates, increasing fuel prices and economic uncertainty linked to the Iran conflict were continuing to weaken buyer demand. He added that the market remained soft despite some improvements in sentiment.
Earlier this year, affordability conditions had shown signs of improvement when interest rates on 30-year fixed mortgages dropped below 6%, marking the lowest level since late 2022. However, that relief was short-lived as geopolitical tensions triggered another rise in inflation expectations and borrowing costs.
NAHB Chief Economist Robert Dietz said recent increases in long-term interest rates were expected to continue affecting housing demand. He noted that some parts of the Midwest were performing relatively better than other regions, but affordability challenges remained significant across the broader market.
Builders continued to use pricing strategies and incentives to support sales activity. Around 32% of builders reduced home prices in May compared to 36% in April. The average price reduction increased slightly to 6% from 5% a month earlier. Sales incentives also remained widespread, with 61% of builders offering incentives during the month. This marked the 14th consecutive month in which the share remained at or above 60%.
The survey also showed improvements in several key indicators. The measure tracking current sales conditions rose to 40 from 37, while expectations for future sales increased to 45 from 42. Buyer traffic, though still weak overall, improved slightly to 25 from 22.
The broader U.S. housing market, however, continues to move at a slow pace. Existing home sales, which account for the largest share of residential transactions, have remained near an annual rate of 4 million units, levels last seen during the slowdown around the 2007-2009 financial crisis.
The new home market also began the year on a weak note, touching a three-year low before showing some recovery in February and March. Fresh data for April is expected later this month and is likely to provide further clarity on whether the improvement can continue.
Recent construction data has also presented a mixed picture. Single-family housing starts rose sharply in March to their highest level in over a year, indicating that some builders were increasing activity. However, permits for future construction declined significantly, suggesting that the recent rise in building activity may not sustain in the coming months.
Source Reuters
5th Jun, 2025
25th May, 2023
11th May, 2023
27th Apr, 2023
Advertisement
Facebook
Whatsapp
