U.S. Homebuilder Confidence Improves Much More Than Expected In May

Homebuilder confidence has improved by much more than anticipated in the month of May, according to a report released by the National Association of Home Builders on Wednesday.

The report said the NAHB/Wells Fargo Housing Market Index climbed to 66 in May from 63 in April, while economists had expected the index to inch up to 64.

Following declines in late 2018 due to higher interest rates and concerns over slower growth, the index has reached its highest level since October of 2018.

"Builders are catching up after a wet winter and many characterize sales as solid, driven by improved demand and ongoing low overall supply," the NAHB said. "However, affordability challenges persist."

The bigger than expected increase by the headline index was partly due to a jump by the index measuring current sales conditions, which surged up to 72 in May from 69 in April.

The metric charting buyer traffic also rose to 49 in May from 47 in April, while the component gauging expectations in the next six months edged up to 72 from 71.

On Thursday, the Commerce Department is scheduled to release a separate report on new residential construction in the month of April.