A slew of mixed market signals is both buoying and biting builder confidence as the year progresses, resulting in a small monthly slide in new housing starts in May after a slight upward revision to April numbers. For buyers who can secure an adequate down payment and find a home in their price range, low mortgage rates mean a monthly payment remains quite affordable – and mortgage applications are up accordingly. While buyer demand should continue to be strong, builders are having a tougher time replicating their buyers’ affordability advantages. Lumber prices have fallen somewhat, but labor costs are rising quickly – itself a sign of strength in the economy, as those who may traditionally have found work in construction are able to find good-paying jobs in other industries. Buildable land is at a premium, making it hard for builders to find areas where they can turn an acceptable profit in the still-strong housing market. We’re left with a new construction market taking two steps forward and one step back, and May was a one-step-back month.