The NAHB/Wells Fargo housing market index is down 6 points to 34 in May after an unrevised 40 in April. The May reading is well below the consensus of 40 in the Econoday survey of forecasters. This is the lowest since 34 in November 2023. However, the report said the survey is compiled with 90 percent of the responses received before the May 12 announcement of the latest tariff agreement with China. The May report expresses deep concerns about elevated interest rates, tariff concerns, building material cost uncertainty and the cloudy economic outlook. Some of the uncertainty around these issues has lifted, although by no means all.

The May index for present sales is down 8 points to 37, the expected sales index is down 1 point to 42, and the buyer traffic index is down 2 points to 23. Present sales appear to be weakened by increased supply of existing units on the market and the level of mortgage interest rates. The Freddie Mac weekly average for a 30-year fixed rate mortgage was as high as 6.81 percent in the April 24 week. It has since declined to 6.76 percent in the May 1 and 8 weeks.

No change expected at 40.0 for May as housing remains depressed.

The housing market index is a monthly composite that tracks home builder assessments of present and future sales as well as buyer traffic. The index is a weighted average of separate diffusion indexes: present sales of new homes, sales of new homes expected in the next six months, and traffic of prospective buyers of new homes.

This report provides a gauge of not only the demand for housing, but the economic momentum. People have to be feeling pretty comfortable and confident in their own financial position to buy a house. Furthermore, this narrow piece of data has a powerful multiplier effect through the economy, and therefore across the markets and your investments. By tracking economic data such as the housing market index, investors can gain specific investment ideas as well as broad guidance for managing a portfolio. Whether the housing market index reflects new home sales or home resales, once a home is sold, it generates revenues for the realtor and the builder. It brings a myriad of consumption opportunities for the buyer. Refrigerators, washers, dryers and furniture are just a few items home buyers might purchase. The economic"ripple effect" can be substantial especially when you think a hundred thousand new households around the country are doing this every month. Since the economic backdrop is the most pervasive influence on financial markets, home sales have a direct bearing on stocks, bonds and commodities. In a more specific sense, trends in the existing home sales data carry valuable clues for the stocks of home builders, mortgage lenders and home furnishings companies.