Homebuilders Continue to Raise Confidence Levels

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Despite the many headwinds facing the economy, homebuilders in the United States continue to feel more optimistic as confidence in the industry reached its highest level in more than six years.

In December, the National Association of Home Builders/Wells Fargo index of builder confidence edged higher to 47, compared to a revised 45 in November, according to the builders’ group. It was the highest reading since April 2006, shortly before the great housing bubble popped. Readings below 50 signals the majority of builders view industry conditions as negative, but the index has logged positive gains for eight consecutive months and gives hope to the housing recovery story.

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Barry Rutenberg, NAHB Chairman, explains, “Builders across the country are reporting some of the best sales conditions they’ve seen in more than five years, with more serious buyers coming forward and a shrinking number of vacant and foreclosed properties on the market. However, one thing that is still holding back potential home sales is the difficulty that many families are encountering in getting qualified for a mortgage due to today’s overly stringent lending standards.”

One component in the survey-current single-family home sales-advanced two points to 51 in December. Sales expectations for the next six months also came in at 51, but represented a slight decrease from a revised 52.

Across the nation, builder confidence increased in two of the four major regions. The Northeast showed the biggest improvement with a jump of 12 points, but this is likely due to superstorm Sandy wreaking havoc on the region.

On Tuesday, shares of homebuilders increased across the board. PulteGroup (NYSE:PHM) surged 3.0 percent, while KB Home (NYSE:KBH) Lennar (NYSE:LEN) both gained more than 2.0 percent. Toll Brothers (NYSE:TOL) and DR Horton (NYSE:DHI) increased 1.2 percent and 1.9 percent, respectively.

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