U.S. Homebuilder Confidence Unexpectedly Rebounds In May

(RTTNews) - After reporting a notable deterioration in U.S. homebuilder confidence in the previous month, the National Association of Home Builders released a report on Monday showing an unexpected improvement in homebuilder confidence in the month of May.

The report said the NAHB/Wells Fargo Housing Market Index climbed to 37 in May after slumping to a seven-month low of 34 in April. Economists had expected the index to remain unchanged.

"The housing market remains soft as higher mortgage rates, rising gas prices and economic uncertainty related to the war in Iran continue to dampen buyer demand," said NAHB Chairman Bill Owens.

He added, "However, efforts in the House to modify the 21st Century ROAD to Housing Act could increase the nation's housing supply and help ease builder concerns."

The unexpected rebound by the housing market index came amid increases by all three of the component indexes, with the NAHB saying some buyers who had been holding back decided to move forward this spring.

The index gauging current sales conditions climbed to 40 in May from 37 in April, the index measuring future sales rose to 45 in May from 42 in April and the index charting traffic of prospective increased to 25 in May from 22 in April.

The NAHB said latest HMI survey also revealed that 32 percent of builders cut prices in May, down from 36 percent in April. The average price reduction was 6 percent in May, up from 5 percent in April.

The use of sales incentives was 61 percent in May, up slightly from 60 percent in April, and marking the 14th consecutive month this share has reached 60 percent or higher, the NAHB said.