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Builder Confidence Rises Five Points in May

Builder confidence in the market for newly built, single-family homes gained five points in May from a downwardly 
revised reading in the previous month to reach a level of 29 on the National Association of Home Builders/Wells 
Fargo Housing Market Index (HMI), released today. This is the index's strongest reading since May of 2007.

"Builders in many markets are reporting that buyer traffic and sales have picked back up after a pause this April," 
said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from 
Gainesville, Fla. "It seems we have resumed the gradual upward trend in confidence that  started at the beginning 
of this year, as stabilizing prices and excellent affordability encourage more  people to pursue a new-home 
purchase."  

"While home building still has quite a way to go toward a fully healthy market, the fact that the HMI has returned 
to trend is an excellent sign that firming home values, improving employment and low mortgage rates are drawing 
consumers back," said NAHB Chief Economist David Crowe. "The pace of this emerging recovery could be stronger were 
it not for the significant impediments that the market continues to face with regard to builder and consumer access 
to credit, inaccurate appraisals, and more recently, rising materials prices."

Derived from a monthly survey that NAHB has been conducting for 25 years, the NAHB/Wells Fargo Housing Market Index 
gauges builder perceptions of current single-family home sales and sales expectations for the next six months as 
"good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as "high to very
high," "average" or "low to very low." Scores from each component are then used to calculate a seasonally adjusted 
index where any number over 50 indicates that more builders view conditions as good than poor.

Each of the index's components rebounded from declines in the previous month. The component gauging current sales 
conditions and the component gauging traffic of prospective buyers each rose five points in May to 30 and 23, 
respectively, with the traffic component hitting its highestlevel since April of 2007. The component gauging sales 
expectations in the next six months rose three points to 34.

Three out of four regions registered improving builder sentiment in May. This included a six-point gain to 32 in the 
Northeast, and five-pointgains to 27 and 28 in the Midwest and South, respectively. The West posted a two-point 
decline, to 29.

Editor's Note: The NAHB/Wells Fargo Housing Market Index is strictly the product of NAHB Economics, and is not seen 
or influenced by any outside party prior to being released to the public. HMI tables can be found at www.nahb.org/hmi. 
More information on housing statistics is also
available at http://www.housingeconomics.com. 

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