• Prior month 34
• NAHB housing index rises 3 to 37 vs 34 estimate
• Sales conditions rose by +3 to 40
• Buyer Traffic was also up +3 to 25
• Sales expectations rose +3 to 45.

The latest NAHB Housing Market Index survey showed builders were slightly less aggressive on outright price cuts in May, with 32% reducing prices versus 36% in April. However, the average discount increased to 6% from 5%, suggesting that while fewer builders are cutting prices, those who are may be offering deeper reductions to attract buyers.

Meanwhile, the use of sales incentives remained elevated at 61%, up slightly from 60% in April. That marks the 14th straight month in which at least 60% of builders have used incentives, underscoring continued pressure on the housing market from affordability challenges and softer buyer demand.

Levels below the 50 level are still considered contractionary despite the gains on the month and values better than expectations.

NAHB Chairman Bill Owens, a home builder and remodeler from Worthington, Ohio said:

“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. 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.”

NAHB Chief Economist Robert Dietz added:.

“Recent increases for long-term interest rates will continue to hold back home buyer demand. Although some regional markets, including parts of the Midwest, are showing relative strength, the housing market continues to face significant affordability challenges.”

Derived from a monthly survey that NAHB has been conducting for more than 40 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.