US homebuilder confidence at five-year high
Companies benefit as cheaper houses and mortgage rates at record low help boost demand
Washington: Confidence among US homebuilders jumped more than forecast in May, reaching a five-year high that signals an improving outlook for construction.
The National Association of Home Builders/Wells Fargo index of builder confidence rose to 29, the highest since May 2007, a report from the Washington-based group showed yesterday. The gauge exceeded the highest projection in a Bloomberg News survey in which the median estimate was 26. Readings below 50 mean more respondents said conditions were poor.
"We have resumed the gradual upward trend in confidence that started at the beginning of this year," Barry Rutenberg, chairman of the National Association of Home Builders and a builder from Gainesville, Florida, said in a statement. This comes "as stabilising prices and excellent affordability encourage more people to pursue a new-home purchase."
Companies such as building products maker Ply Gem Holdings Inc are benefiting as cheaper homes and mortgage rates at a record low combine to boost demand. While foreclosures remain a hurdle for the industry three years after the end of the last recession, Federal Reserve Governor Elizabeth Duke said yesterday that there are indications the "tepid" property market is on the mend.
Yesterday's report showed gains in measures of current single-family home sales, the outlook for the next six months and buyer traffic.
Range of estimates
Estimates of 47 economists in the Bloomberg survey ranged from 23 to 27. The group revised April's reading to 24, from a previously estimated 25. The gauge, which was first published in January 1985, averaged 54 in the five years leading to the recession in December 2007. It reached a record low of eight in January 2009.
Builder shares gained after the figures, with the Standard & Poor's 500 Supercomposite Homebuilding Index climbing three per cent at midmorning in New York.
