U.S. Homebuilders are the most upbeat they’ve been about the housing market in the past four and a half years according to the National Association of Home Builders.
The NAHB/Wells Fargo Housing Market index rose to 25 from 21 the month before, the group said in a statement. Economists had predicted the index would hold steady at 21.
This is the highest level since June 2007 when the housing market was in the beginning of the crash. After staying at about the same level for the past year, the index has improved since October 2011, reinforcing optimism that the housing market may have hit bottom and is on its way back up.
However, the index remains way below the 50 mark, suggesting more builders view the current market conditions as poor rather than favorable. The index has not been above 50 since April 2006.
“Builders are seeing greater interest among potential buyers as employment and consumer confidence slowly improve in a growing number of markets, and this has helped to move the confidence gauge up from near-historic lows in the first half of 2011,” David Crowe, chief economist at NAHB, said in the statement.
“That said, caution remains the word of the day as many builders continue to voice concerns about potential clients being unable to qualify for an affordable mortgage, appraisals coming through below construction cost, and the continuing flow of foreclosed properties hitting the market.”
The current sales component index rose to 25 from 22, while the gauge of sales expectations for the next six months climbed to 29 from 26. Prospective buyer traffic gained to 21 from 18.