Home Builders Continue To Gain Confidence, Index Up To 40

The confidence of U.S. home builders jumped in February to its highest since June 2006 as
low mortgage rates and sales incentives helped boost demand, the National Association of Home Builders said.

The NAHB/Wells Fargo Housing Market Index rose to 40 in February from 35 in January. The index had fallen to a 15-year low of 30 in September. A year ago, the index was at 56. The index has been below 50 for 10 months.

"Builders are becoming increasingly convinced that the abrupt downslide in home sales is in their rear view mirrors and they see better times as they look at the road ahead," said NAHB Chief Economist David Seiders, in a written statement.

Lower energy prices, favorable mortgage rates and growth in employment and household income have contributed to the recent stabilization of buying demand, he said in a release.

"In addition, builders continue to offer substantial sales incentives to move their product and limit cancellations, which has helped to firm up buyer demand," he added.

All three component indexes registered improvement in February. The index gauging current single-family home sales gained six points to 42, while the component measuring the traffic of prospective buyers rose five points to 31. Of particular note, the index gauging sales expectations for the next six months jumped over the 50 threshold for the first time since last June, posting a seven-point gain to 55.

The index rose in all four regions in February, with the Northeast posting the biggest gain of eight points to 46.