Builder confidence for newly built, single-family homes rose just slightly to 37 points in May remaining at historic lows, according to data from the National Association of Home Builders (NAHB) and Wells Fargo released Monday.
Before the coronavirus pandemic, builder confidence was at an average of 74 points in 2020. But as confirmed cases of COVID-19 began to rise and states closed their economies, real estate took a major hit as people waited to both buy and build homes. Now that economies are opening up, the numbers are inching upward although financial insecurity and fears of a second wave of the outbreak are keeping them at historic lows.
The index measuring current sales conditions rose from 36 to 42. Sales expectations over the next six months rose from 36 to 46 while buyer traffic rose from 13 to 21.
HMI is a weighted average of separate indices for three single-family data points. It asks respondents to rate the market conditions for the sale of new homes at present and in the next six months, as well as the traffic of prospective buyers of new homes. It falls in a range of 0-100.
The Northeast, which has been hit hardest by the pandemic, has the lowest builder confidence at only 17 points. The rest of the country is slightly more optimistic although at 32 for the Midwest, 42 for the South and 44 for the West, the numbers are still very low compared to what was initially forecast for the year. Scores below 50 are considered to be a negative outlook.