Home builder confidence hits a 7-month high in May as housing market headwinds ease

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A measure of industry sentiment among home builders jumped more than expected, in a possible sign that they may increase their building activity to meet...

The numbers: The National Association of Home Builders’ monthly confidence index jumped three points to 66 in May, the trade group said Wednesday. That was the highest reading since October.Any reading over 50 signals improvement.

In May, the index sub-gauge that tracks current sales conditions jumped three points to 72, the component that measures expectations over the next six months ticked one point higher to 72, and the index of buyer traffic rose two points to 49.Big picture: Economists use the NAHB’s index as a gauge of likely home building industry activity. If builders are more confident in market conditions, they’re more likely to break ground on more houses, leading to more jobs and overall economic activity.

What they’re saying: “We would look and see that some of the demand that was displaced in the fall will probably elongate a selling season this year in the spring and into early summer as those buyers have returned and more continue to come into the market, seeing it’s still a great time to buy a home,” said Michael Murray, chief operating office of D.R. Horton, Inc. DHI, +0.25% , when the company reported quarterly earnings in late April.

 

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