U.S. homebuilder confidence slips in May
U.S. homebuilders are feeling less confident this month in their near-term sales prospects, reflecting doubts stirred by a sluggish start to the annual spring home-selling season.
Even so, builders are more optimistic that sales will perk up later this year. That would bode well for home construction, which slowed early this year as severe winter weather dampened sales in many markets.
The National Association of Home Builders/Wells Fargo builder sentiment index released Thursday fell to 45. That's down one point from a revised reading of 46 in April and the lowest level in 12 months.
Readings below 50 indicate that more builders view sales conditions as poor rather than good. The overall index has been below 50 since February.
"Builders are waiting for consumers to feel more secure about their financial situation," said David Crowe, the NAHB's chief economist. "Once job growth becomes more consistent, consumers will return to the market in larger numbers and that will boost builder confidence."
Many analysts have been expecting an improving economy and job market to lift the housing market, which has been recovering the past two years. But housing has struggled to maintain momentum.
The spring home-selling season, which typically sets the pattern for residential hiring and building construction in the ensuing months, got off to a lackluster start this year.
U.S. sales of new homes are running 13 percent below last year's pace. They slowed in March to a seasonally adjusted annual rate of 384,000, down from 443,000 a year earlier. The March figure represents the lowest rate since last July, when sales cratered after mortgage interest rates spiked.
Sales of previously occupied U.S. homes also fell in March, sliding to a seasonally adjusted annual rate of 4.59 million, the lowest level since July 2012.
Several of the nation's biggest homebuilders have said that sales were held back in the first three months of the year by the severe winter weather that battered much of the U.S. Rising prices and higher mortgage interest rates also have deterred some homebuyers, particularly first-time buyers. Others have had trouble qualifying for mortgages.
Still, many builders also saw demand accelerating last month, stoking expectations that sales will rebound this summer.
That optimism is reflected in the latest NAHB index, which is based on responses from 278 builders.
While builders' view of current sales conditions for single-family homes fell two points to 48, the lowest level in 12 months, a measure of traffic by prospective buyers increased two points to 33. And builders' outlook for sales of single-family homes over the next six months rose one point to 57.
Some builders are already seeing sales perk up this year.
Sales at The Olson Co., which builds homes in Southern California priced at an average of $500,000, are up 60 percent in the first quarter from a year ago, said CEO Scott Laurie.
A tight supply of available homes for sale in the counties of Los Angeles and Orange has helped stoke demand. That has Olson in expansion mode. The builder is now planning to double the company's number of open communities to eight.
"Last year was a good year, but this year has been even stronger," Laurie said. "The demand is there."