National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for May declined six points from an upwardly revised reading in the previous month to hit 45 for the latest report, its lowest mark since mid-1995. Rising mortgage rates, deepening affordability issues and the retreat of investors/speculators from the marketplace are prompting single-family home builders to further adjust their perspectives on the new-home market.

• NAHB expects new-home sales to be off by 12% from the record posted in 2005.
• Single-family starts could be down by about 7% from the 2005 record.
• The HMI fell three points to 47 in the Northeast, two points to 30 in the Midwest, six points to 51 in the South and eight points to 61 in the West. 
• The growth in single-family home prices continued to cool in the first quarter, but many metropolitan areas are still showing double-digit annual gains, according to the latest survey by National Association of Realtors release today
• According to the NAR report, the national median existing single-family home price was $217,900 in the first quarter, up 10.3 percent from a year earlier. In the fourth quarter of 2005, the annual rate of home-price appreciation was 13.6 percent.

The NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales, sales expectations for the next six months, and the traffic of prospective buyers. Any number over 50 indicates that more builders view sales conditions as good than poor.