Confidence among home builders fell back below the key breakeven threshold of 50, per the National Association of Home Builders (NAHB), as their Housing Market Index dropped six points to 45 in May. Any score over 50 on this index, which runs from 0 to 100, signals that more builders view conditions as good than poor.
Among the three index components, current and future sales expectations both remain in expansion territory, but they fell sharply from April. The gauge judging buyer traffic also declined, remaining in contraction territory.
What’s the bottom line? NAHB’s Chair, Caril Harris, explained, “The market has slowed down since mortgage rates increased and this has pushed many potential buyers back to the sidelines.” He added that builders are concerned about some recent code rules that could lead to increased costs, which also impacted sentiment overall.