Homebuilder confidence in U.S. climbs on improving outlook

Confidence among U.S. homebuilders improved in May for the first time in five months as buyers rush to take advantage of near record-low mortgage rates.

The National Association of Home Builders/Wells Fargo index of builder confidence rose to 44 from a revised 41 in April, the Washington-based group reported today. The median forecast in a Bloomberg survey called for an increase to 43. Readings below 50 mean more respondents said conditions were poor.

“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 Rick Judson, chairman of the trade group and a builder from Charlotte, North Carolina. “This is definitely an encouraging sign.”

Low mortgage rates, a strengthening job market and limited inventories are benefiting builders including PulteGroup Inc. and Lennar Corp. as the housing market contributes to growth this year after emerging as a bright spot in 2012. Gains in housing will help the world’s largest economy move through a global slowdown that is hurting manufacturing.

Another report today showed industrial production declined in April by the most in eight months, reflecting broad-based cutbacks manufacturing that show factories will provide little support for the economy.

Stocks trimmed earlier losses after the builder confidence report. The Standard & Poor’s 500 Index fell less than 0.1% to 1,649.52 at 10:02 a.m. in New York. It closed at a record 1,650.34 yesterday.

Industrial Production

Output at factories, mines and utilities fell a more-than- forecast 0.5% after a revised 0.3% gain in the prior month that was weaker than previously reported, a report from the Federal Reserve showed today in Washington. The median forecast in a Bloomberg survey called for a 0.2% decline. Manufacturing, which makes up 75% of total production, unexpectedly fell 0.4%, the third drop in four months.

All three components of the homebuilder survey showed improvement. The group’s gauge of the sales outlook for the next six months rose a point to 53, the highest reading since February 2007, from a revised 52.

Prospective buyer traffic also improved, to 33 in May from 30 in April. An index of current single-family home sales posted a four-point gain to 48 in May.

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