An index that gauges builder confidence in new single-family homes rose 5 points in April to the highest level since October 2008, the National Association of Home Builders reports.
The NAHB/Wells Fargo Housing Market Index is derived from a monthly survey of builders that asks builders to rate their perceptions of current market conditions and sales expectations in the next six months as "good," "fair" or "poor," and to rate traffic of prospective buyers as "high to very high," "average" or "low to very low."
Scores for each component are used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.
Though the overall index score is still very low at 14 this month, it is an improvement over index scores for the past five months, when it did not exceed 9. This gain was the largest one-month increase recorded since May of 2003, NAHB reported. The highest increase was in the index segment that gauges single-family sales expectations in the next six months, which rose 10 points from last month.
David Crowe, NAHB chief economist, said in a statement that low home prices and mortgage rates and the introduction of the $8,000 tax credit for first-time buyers have aided builders, though builders still face difficulty in securing financing for acquisition, development and construction.
NAHB represents about 200,000 members involved in homebuilding, remodeling, multifamily construction, property management, subcontracting, design, housing finance, building product manufacturing and other aspects of residential and light commercial construction.
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