The National Association of Home Builders (NAHB) Housing Market Index (HMI) for December indicates builder confidence in newly constructed single-family homes increased for the third consecutive month as the index reached its highest point since May 2010.
The HMI rose two points, driven by close improvements in all three of its component indices. Builder reports on prospective buyer traffic improved the most to reach 18, although they remained at the lowest absolute level. Current sales conditions and six-month sales expectations improved by smaller margins.
Regionally, builder confidence rose in the West and particularly in the South, where it reached a high not seen since March 2008. Sentiments in the Midwest were unchanged, while the Northeast index dropped a single point.
"While builder confidence remains low, the consistent gains registered over the past several months are an indication that pockets of recovery are slowly starting to emerge in scattered housing markets," said NAHB chairman Bob Nielsen. "However, the difficulties that both builders and buyers continue to experience in accessing credit for new homes are holding back potential sales even in areas where economic conditions are improving."
NAHB chief economist David Crowe noted the upward trend is the first of its length since mid-2009, marking a reduction in the effects of foreclosures and large inventories on home sales.