Home builder confidence hits highest level in five years

Home builder confidence in the housing market hit a five-year high in August, as the fragile sector continues showing gradual improvement. 

Builder confidence for newly built, single-family homes was up two points to 37, the fourth consecutive monthly increase, according to a housing index released Wednesday by the National Association of Home Builders and Wells Fargo. 

This gain builds on a six-point increase in July and brings the index to its highest level since February 2007. The index last hit 50 in April 2006. 

"This fourth consecutive increase in builder confidence provides further evidence of the gradual strengthening that's occurring in many housing markets and providing a needed boost to local economies," said David Crowe, NAHB's chief economist.

"However, 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."

All index components posted gains in August and were the highest level seen in five years. 

The indexes gauging current sales conditions and traffic of prospective buyers each rose three points, to 39 and 31, respectively, while the component measuring sales expectations in the next six months inched 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 Barry Rutenberg, chairman of the NAHB and a home builder from Gainesville, Fla. 

Regionally, the results were split with builder confidence increasing nine points to 42 in the Midwest and two points to 35 in the South. 

But confidence was down by nine points to 25 in the Northeast and three points to 40 in the West in August. 

The index also showed a three-month moving average of each region's index.  

The current three-month moving averages show a two-point decline to 29 in the Northeast, a five-point gain to 35 in the Midwest, a three-point gain to 32 in the South and a three-point increase to 38 in the West.