U.S. home builders are reported to be expecting stronger sales ahead, but mortgage applications for newly-built homes south of the border don't currently support that hope.
After subsiding in April, home-builder sentiment in the States rose two points in May to the second-highest level since the recession. Sentiment now stands at 70 on a monthly index from the National Association of Home Builder (NAHB). Anything above 50 is considered positive sentiment. The index was at 58 in May of last year.
Of the index's three components, sales expectations over the next six months saw the biggest gain, rising four points to 79, the highest level since June 2005. Current sales conditions also rose two points to 76. The components measuring buyer traffic, however, fell one point to 51.
Home-builder sentiment may be on the march, but single-family housing starts have not seen strong gains, and entry-level, mortgage-dependent home buyers are clearly struggling with weakening affordability. Mortgage applications to purchase a newly built home fell 4.3% in April, compared with April 2016, according to the Mortgage Bankers Association. That is the first annual drop this year. Applications plummeted 20% from March, although the MBA's index does not include any seasonal adjustments.
