U.S. homebuilder sentiment improved in May, but the industry’s mood remains cautious as affordability continues to weigh on buyers during the spring selling season, Bloomberg writes.
The National Association of Home Builders/Wells Fargo index rose three points to 37, still well below the 50 mark that separates positive from negative conditions.
The rebound suggests builders are feeling slightly better about the market, but higher long-term interest rates and stubbornly expensive home prices continue to keep many would-be buyers on the sidelines. Builders are responding with price cuts and incentives, including mortgage rate buydowns, to help close deals. In May, 32% of builders reported cutting prices, while 61% said they were using sales incentives—the 14th straight month that figure has topped 60%.
Sales expectations for the next six months also improved but remained below breakeven, underscoring a housing market that is stabilizing in some areas while still struggling with affordability, financing costs and uneven buyer demand.
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