Is Confidence Growing in the Housing Recovery?

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Amid low interest rates and heavy intervention from policymakers, the housing market is still trying to regain confidence among consumers. However, homebuilder sentiment this month improved to its best level since August.

After remaining unchanged in November, the National Association of Home Builders/Wells Fargo’s index of builder confidence jumped 4 points to 58 in December — matching its highest reading in four months and an eight-year high. In fact, more builders have now viewed market conditions as good than poor for seven consecutive months. The reading beat expectations calling for 55. Any reading above 50 indicates that more builders view sales conditions as good rather than poor. In the five years before the Great Recession, the index averaged 54, and hit an all time low of 8 in early 2009.

“This is definitely an encouraging sign as we move into 2014,” said National Association of Home Builders (or, NAHB) Chair Rick Judson, a home builder from Charlotte, N.C. “The HMI is up 11 points since December of 2012 and has been above 50 for the past seven months. This indicates that an increasing number of builders have a positive view on where the industry is going.”

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