Builder Confidence Rises to Highest Level Since June 2007

Homebuilder confidence in the market for newly built, single-family homes rose for the fourth consecutive month in January to its highest level since June 2007 on the NAHB/Wells Fargo Housing Market Index.


The index rose four points to 25. Each of the index’s three components, which measure current sales conditions, sales expectations in the next six months and traffic of prospective buyers, posted increases.

The three major U.S. stock indicies extended their gains on Wednesday, following the better-than-expected housing data.

“Builder confidence has now risen four months in a row, with the latest uptick being universally represented across every index component and region,” noted Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev.

This is just the third time the index has been at 20 or above in two years.

Still, any reading below 50 indicates negative sentiment about the housing market. The index hasn't reached 50 since April 2006, the peak of the housing boom.

The index is rising because builders are optimistic that sales will rise this year. In 2011, they fell and are likely to be the lowest level on records going back nearly a half-century.

The index rose in all four regions of the U.S. with the Northeast posting the largest increase — a 9-point rise to 23.

“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,” noted NAHB Chief Economist David Crowe.