Future Home Sales Expectations at 5-Year High

After a three-month slump, homebuilder confidence is on the rise, according to May's National Association of Home Builders/Wells Fargo Housing Market Index released today.

After dropping to a revised reading of 41 for April, a more positive outlook for current and future sales, as well as prospective buyer traffic, pushed this month's index up three points to 44.

Source: Author; data from NAHB.org.

"Builders are noting an increased sense of urgency among potential buyers as a result of thinning inventories of homes for sale, continuing affordable mortgage rates, and strengthening local economies," said NAHB Chairman Rick Judson in today's press release. "This is definitely an encouraging sign even amid rising challenges with regard to the cost and availability of building materials, lots, and labor."

The current sales component increased four points to 48, while prospective buyer traffic improved three points to reach 33. As a positive sign toward a housing market recovery, future sales expectations bumped up one point to 53 -- the highest level since February 2007.

NAHB Chief Economist David Crowe believes housing market improvements may be the first movers in a strengthening economy: "While industry supply chains will take time to re-establish themselves following recession-related cutbacks, builders' views of current sales conditions have improved, and expectations for the future remain quite strong as consumers head back to the market in force."

The article Future Home Sales Expectations at 5-Year High originally appeared on Fool.com.

You can follow Justin Loiseau on Twitter, @TMFJLo, and on Motley Fool CAPS, @TMFJLo.Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.