U.S. homebuilders’ confidence held steady in May for the fourth month in a row, reflecting an overall optimistic outlook for the new-home market even as the pace of sales has slowed recently.
The National Association of Home Builders/Wells Fargo builder sentiment index released Monday was unchanged at 58.
Readings above 50 indicate more builders view sales conditions as good, rather than poor. The index had been in the low 60s for eight months until February.
Builders’ view of current sales and a measure of traffic by prospective buyers held steady. Builders’ outlook for sales over the next six months increased to the highest level since December.
The U.S. housing market looks more tempered after strong growth in 2015.
Sales of new homes slid to a seasonally adjusted annual rate of 511,000 in March, the third monthly decline in a row.
Even so, sales in the January-March period were running slightly ahead of the year-to-date pace in 2015. April’s sales figures are due out next week.
Despite the sluggish start to the year, some economists see the low mortgage rates and improving job market as strong enough to boost sales in the coming months.
The new-home market still has a long way to go to recover from the housing crash of almost a decade ago. New-home sales are significantly below the half-century average of more than 650,000 a year.
Builders still anticipate sales growth, although they have become slightly more cautious in recent months.
“Job creation, low mortgage interest rates and pent-up demand will also spur growth in the single-family housing sector moving forward,” said Robert Dietz, the NAHB’s chief economist.
This month’s builder index was based on 259 respondents.
Builders’ view of sales over the next six months rose three points to 65, the highest reading since December.
A gauge of traffic by prospective buyers held at 44, while a measure of current sales conditions for single-family homes remained unchanged at 63.
Though new homes represent only a fraction of the housing market, they have an outsized impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to NAHB data.