U.S. builder confidence reaches five year high

Building on recent momentum, builder confidence for newly built, single-family homes gained two points from last month’s tally, reaching a total of 37, according to the National Association of Home Builders and Wells Fargo. The new number comes on the heels of July’s six-point climb — the largest gain in more than a decade — and brings the index to its highest level since February 2007.

Every Housing Market Index component saw gains this month. Current sales conditions and traffic of prospective buyers posted respective three-point gains to 39 and 31; sales expectations for the next six months crawled up one point to 44. “While there is still much room for improvement, we have come a long way from the depths of the recession and the outlook appears to be brightening,” said NAHB Chairman Barry Rutenberg.

Scores over 50 reflect positive sentiments on the index’s 1-100 scale.

Although builder confidence jumped nine points in the Midwest to 42 and inched up two points in the South to 35, the Northeast saw a nine-point decline to 25 and the West dropped three points to 40.

David Crown, NAHB’s chief economist, said he sees gradual strengthening in housing markets from this month’s number, he acknowledged “we are still at a very fragile stage of this process and builders continue to express frustration regarding the inventory of distressed properties, inaccurate appraisal values and the difficulty of accessing credit for both building and buying homes.” — Zachary Kussin