Economist's Insights

Hopes of Future Sales Lifts the NAHB Market Index

May 15, 2017

The NAHB’s Housing Market Index bounced back in May and continues to hover near its highest levels of the cycle. The headline index rose 2 points to an even 70, one point shy of the almost 12-year high set in March. Traffic of prospective buyers slowed slightly for a second month but responses showed stronger current sales and expectations for future sales. The future sales index experienced the biggest gain to register its highest result since June 2005. New home sales strengthened in each month of 1Q helping drive a 14% increase in residential investment in the first release of 1Q GDP. The persistent strength in the home builder index signals the housing recovery could continue to be accretive to near-time economic growth despite tight supply and elevated mortgage rates weighing on affordability.