U.S. builders’ confidence reaches five-year high

Home builder confidence inched up a single point in June and reached its highest level since May 2007, according to the Housing Market Index released today by the National Association of Home Builders and Wells Fargo. The uptick follows a 4-point rise in May and brings the confidence level to 29. When the index surpasses 50 more builders view conditions in the single-family home market as good than do poor.

While the rising confidence level does keep in line with the gradual improvements the NAHB has been expecting, the agency’s chief economist, David Crowe, noted that “recent economic reports that have shown some weakening in the pace of recovery likely factored into the marginal gain.” Crowe added that tighter lending standards continue to present an obstacle to home builders.

Builders have reported confidence levels between 24 and 29 for each of the first six months of 2012 following 40 months where the index surpassed 20 just twice.

The index is derived from three components: current sales conditions (which rose 2 points to 32), sales expectations for the next six months (unchanged at 34) and prospective buyer traffic (unchanged at 23). At 32, builders reported current sales conditions to be at their best since April 2007.

In the Northeast and South, the index fell 2 points to 29 and 26, respectively, while the Midwest posted a 5-point gain to reach 31 and the West’s index jumped 4 points to 33. — Adam Fusfeld