Confidence among U.S. home builders fell for the fourth time in five months, a sign the housing market may be slow to pick up after an up-and-down winter.
The National Association of Home Builders’ confidence index fell two points to a reading of 54 in May, the industry group said Monday. A reading above 50 means most builders generally hold a favorable view of the market for newly built, single-family homes.
Economists surveyed by The Wall Street Journal had expected a May confidence reading of 58.
“Consumers are exhibiting caution and want to be on more stable financial footing before purchasing a home,” NAHB Chief Economist David Crowe said in a statement.
Despite the latest fall, the home builder’s group said the second quarter of the year is shaping up as solid. Mr. Crowe noted a measure of future sales expectations has been tracking up in recent months, mortgage rates remain low and house prices appear affordable. “These factors should spur the release of pent-up demand moving forward,” he said.
The report, based on a survey of builders, showed that the gauge of sales expectations for the next six months rose one point to 64, its highest level since December. The measure of buyer traffic dropped one point to 39 and the component for current sales conditions decreased two points to 59.
The dip in confidence comes amid other signs that the spring home-selling season is gaining momentum.
Last month, the National Association of Realtors said its pending home sales index, a forward-looking gauge of home purchases, rose in March for the third straight month. The Realtors group is forecasting existing home sales for the full year will reach the highest level since 2006. And home prices are picking up, a sign of rising demand.
If builders do step up construction to meet perceived demand, that would help create new jobs, increase purchases of materials and stoke an economy that slowed markedly in the first quarter of the year.
Monday’s report showed builder confidence rose one point in the West to 56, held steady in the South at 59 and in the Northeast at 43, and fell four points in the Midwest to 51.