NAHB Housing Market Index: Lack of Existing Inventory Boosts Builder Confidence

This article was originally written by Doug Short. From 2016-2022, it was improved upon and updated by Jill Mislinski. Starting in January 2023, AP Charts pages will be maintained by Jennifer Nash at Advisor Perspectives/VettaFi.

The National Association of Home Builders (NAHB) Housing Market Index (HMI) is a gauge of builder opinion on the relative level of current and future single-family home sales. The data is collected from a monthly survey of about 900 home builders asking respondents to, "rate market conditions for the sale of new homes at the present time and in the next six months as well as the traffic of prospective buyers of new homes." It is a diffusion index, which means that a reading above 50 indicates a favorable outlook on home sales; below 50 indicates a negative outlook. The latest reading came in better than expected (45) at 50, up 5 from last month, and is the index's highest reading in the last ten months.

Here's an excerpt from this morning's blog update:

Limited existing inventory, which has put a renewed emphasis on new construction, resulted in a solid gain for builder confidence in May even as the industry continues to face several challenges, including building material supply chain disruptions and tightening credit conditions for construction loans.

Here is the historical series, which dates from 1985. This month's reading is the highest the index has been in the last ten months and the fifth consecutive month that builder confidence has increased.

Housing Market Index