May home builder sentiment slips, but stays on the sunny side

It wasn't enough to push builder sentiment into negative territory, but the NAHB/Wells Fargo Housing Market Index fell a little in May.

"Consumers are exhibiting caution, and want to be on more stable financial footing before purchasing a home," NAHB chief economist David Crowe said. "On the bright side, the HMI component measuring future sales expectations has been tracking upward all year, mortgage rates remain low, and house prices are affordable. These factors should spur the release of pent-up demand moving forward."

According to the National Association of Home Builders (NAHB), the Index reached 54 in May, compared with 56 in April.

Economists polled by Reuters predicted a reading of 57 this month.

On the bright side, the index has not dipped below 50 since June 2014, indicating that more builders have viewed market conditions as favorable than poor.

For single-family homes, the index fell to 59 from 61. Single-family sales expectations for the next six months rose to 64 from 63, and prospective buyer traffic fell to 39 from last month's 40.