ConDig (15-May-18).  Confidence among US homebuilders continued to grow in May amid robust demand for single-family homes and tight supply.

The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for newly-built single-family homes rose two points to a level of 70 in May compared with a downwardly revised April reading of 68 and 69 in the same period last year. Anything above 50 is considered positive.

“The solid May report shows that builders are buoyed by growing consumer demand for single-family homes,” said NAHB chairman Randy Noel.

“However, the record-high cost of lumber is hurting builders’ bottom lines and making it more difficult to produce competitively priced houses for newcomers to the market.”

Lumber prices have posted gains of more 30% this year to reach their highest level on record in the wake of US duties on imports from Canada, which have squeezed supplies and boosted home-construction costs.

The association forecasted demand for homes to remain bolstered by tight housing inventory, employment gains and “demographic tailwinds”.

Of the NAHB index’s three components, current sales conditions increased two points to 76 in May. Buyer traffic and sales expectations in the next six months remained unchanged at 51 and 77, respectively.

On a three-month moving average for regional HMI scores, the West and Northeast held steady at 76 and 55, respectively. Meanwhile, the South and Midwest each edged down one point to respective levels of 72 and 65.