Builder confidence in the United States increased for the eighth month in a row in December. It also reached its highest level in more than six years. The index compiled by the National Association of Home Builders and Wells Fargo & Co. had a reading of 47, which is the highest since April 2006.
The reading was still below the heady readings from the 60s and 70s during the housing bubble. A reading under 50 is an indication that more builders still have a negative outlook than positive. But the trade association said that the signs were encouraging.
The reading of 47 is a 2 point gain from the revised November reading. One thing that is holding back potential home sales is the difficulty that families have in getting qualified for a mortgage because of the strict lending standards.
The monthly survey released by NAHB has been conducted for the past 25 years. The NAHB/Wells Fargo Housing Market Index measures the builder perceptions of single family home sales today as well as the sales expectations for the next six months as poor, fair or good.
The survey asks builders to rate the number of prospective buyers as low to very low, average, or high to very high. Scores from the various factors are then used to come up with a seasonally adjusted index. A reading above 50 shows that more builders view sales conditions as good than poor.
According to NAHB Chairman Barry Rutenberg, a homebuilder from Gainesville, Florida, builders across the nation had the best sales condition in more than five years. They encounter more serious buyers at present and the number of vacant and foreclosed properties on the market went down.
Builders said that the biggest problem that the industry is facing right now is the strict lending standards governing the sector. It was the opposite of the easy-money practices that resulted to the mortgage and housing collapse.