Home-builder confidence improved in May as the housing market showed signs of strength in spring.
The National Assn. of Home Builders said its index of confidence in the housing market gained three points to 44 from a downwardly revised 41 in April.
The increase reflected improvements in current sales conditions and sales expectations and increases in the numbers of prospective buyers touring model homes.
But the index still depicts tepidness in the market: Any reading below 50 indicates that more builders view conditions as poor than view them as good.
“Builders are noting an increased sense of urgency among potential buyers as a result of thinning inventories of homes for sale, continuing affordable mortgage rates and strengthening local economies,” Rick Judson, chairman of the building association, said in a news release. "This is definitely an encouraging sign even amidst rising challenges with regard to the cost and availability of building materials, lots and labor.”
All three components of the index gained in May. The current-sales index was up four points to 48, while a measure of expectations for future sales edged up a single point to 53 -- its highest level since February 2007. The index of prospective-buyer traffic gained three points to hit 33.