The National Association of Home Builders (NAHB) Housing Market Index, which is a near real-time read on builder confidence, rose five points to 50 in May. Any reading above 50 on this index, which runs from 0 to 100, signals expansion while readings below 50 signal contraction. May’s reading marks the fifth straight month this measure has increased and the first time builder sentiment has hit this important midpoint since July 2022.

All three components of the index posted gains, with current sales conditions rising five points to 56, sales expectations for the next six months up seven points to 57, and buyer traffic moving two points higher to 33.

What’s the bottom line? Home builder confidence overall has now risen 19 points since the low of 31 in December. The buyer traffic component has also made a big recovery since reaching a low of 20 last November. NAHB Chief Economist Robert Dietz noted the “lack of existing inventory continues to drive buyers to new construction.” Home builders are also continuing to use incentives to appeal to homebuyers.