According to the The National Association of Home Builders/Wells Fargo’s report for May, the U.S. builders’ confidence remained unchanged for the fourth straight month suggesting a steady growth of the housing market.
U.S. home builders seem optimistic about the economic outlook despite sluggish sales in recent months.
The latest report shows that the builders’ confidence index stays at 58. A reading above 50 suggests that the market is on a climbing trend as builders consider the pace of sales satisfactory.
The index for May is based on a survey involving 259 participants.
Until February when the reading stabilized to 50, the gouge went up and down below 60 for eight months in a row. The builders’ association expects more sales in the coming months as it has observed steady consumer traffic.
The group said that in the following six months sales should surpass the highest level since Dec., 2015. In 2015, there was a strong rebound of the U.S. housing market, but for 2016 analysts expect a more tempered growth.
In March, new home sales slipped to a new low to 511,000 marking the third month of decline. The good news is that even so these sales were higher than the ones recorded for the same time period in 2015. A report on new home sales for last month is expected to be released next week.
Nevertheless, some analysts are confident that better job opportunities and more appealing mortgage rates would make a big difference and boost sales over the next months. Yet, most analysts agree that new-home sales need much more time to rebound after the colossal crash about eight years ago.
In the 1950s, new-home sales averaged to 650,000 per year, which means that the market hasn’t fully recovered yet. Builders also expect sales to grow but they remain cautious. Robert Dietz, senior economist with the NAHB believes that a better labor market, low rates, and postponed demand should push sales of single-family homes to new levels.
For the second half of the year, builders expect sales to rise three points to a 65 reading. In May, buyer traffic stayed steady at 44, while single family home sales didn’t move from 63.
New-home sector is especially important for the entire U.S. housing market because it has a strong impact on the nation’s economy. Each new home means that three more people have an occupation for at least a year. Plus, $90,000 worth of taxes are generated in the process.
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