Home builder confidence rose in August to its highest level in more than a year, according to the latest reading of the National Association of Home Builders/Wells Fargo Housing Market Index (HMI).
The Washington-based trade association said Monday the index rose one point to 18, a level not seen since June 2008.
The reading for current sales conditions was unchanged at 16, while traffic by prospective buyers rose three points to 16. The index for expected sales over the next six months jumped four points to 30, signaling that builders think the worst of the housing slump is over.
The report reflects a survey of 474 residential developers nationwide.
“Home builder expectations have been buoyed by the success of the first-time home buyer tax credit and its anticipated boost to buying activity leading up to the Nov. 30 expiration date,” NAHB Chairman Joe Robson, a home builder from Tulsa, Okla., said in a press release.
“The question is what happens after that, he added. "Whether there will be enough momentum to keep us moving toward a recovery, particularly in light of significant headwinds such as the severe credit crunch for housing production loans and inappropriate appraisal practices that are scuttling a quarter of all new-home sales."
"Unless Congress and the Administration focus their attention on housing right now, this improvement may well be short-lived,” he said.
“One very positive aspect of today’s report is the big gain registered in the component gauging home builders’ expectations for the next six months,” said NAHB Chief Economist David Crowe. “This reflects anticipated sales stemming from the tax credit as well as recent signs that an economic recovery has begun."
Index readings lower than 50 indicate negative sentiment about the market. The last time it was above 50 was in April 2006.
—AP contributed to this report