By Julianne Pepitone, CNNMoney.com contributing writer. www.cnnmoney.com, May 18, 2009: 1:04 PM ET
Homebuilders’ confidence rose in May – the second consecutive month – boosted by first-time homebuyer tax credits and a more affordable housing market, according to a report released Monday.
The National Association of Home Builders/Wells Fargo said its monthly index rose two points to 16 after having jumped five points in April.
While 16 is still a low score – any number below 50 indicates that more builders view conditions as poor rather than good – it shows sentiment is improving.
Two out of the three components of the index rose in May: Current sales conditions jumped two points to 14, and sales expectations for the next six months rose three points to 27.
“Builders are responding to what they perceive to be some of the best home-buying conditions of a lifetime,” NAHB Chairman Joe Robson said in the release. A report earlier this month showed home prices fell 14% in the first quarter of 2009.
“You’re not likely to get a better deal in terms of mortgage rates than what’s available right now,” added Robson, who is a home builder in Tulsa, Okla.
0:00 /0:46Tax break for homebuyers
The report also cited encouragement from the Department of Housing and Urban Development’s recent announcement that it plans to allow home buyers to use the stimulus package’s $8,000 tax credit as downpayment cash.
Has the market hit bottom?
The uptick from April’s five-point jump was “no fluke,” NAHB chief economist David Crowe wrote in the report. “This continued increase indicates that home builders feel we’re at or near the bottom of the market.”
“Provided that builder access to production credit significantly improves,” the market should continue to skew positive for home buyers and builders alike, he said.
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