Homebuilder sentiment improves on late spring surge in demand

"Recent increases for long-term interest rates will continue to hold back home buyer demand," said Robert Dietz, NAHB's chief economist, in a release. "Although some regional markets, including parts of the Midwest, are showing relative strength, the housing market continues to face significant affordability challenges."

All three of the index's components were higher by 3 points month over month, with current sales conditions rising to 40, buyer traffic jumping to 25 and future sales expectations up to 45.

The survey also found fewer builders cutting prices in May, at 32% compared with 36% in April. The use of sales incentives was reported at 61% in May, up slightly from 60% in April.