Homebuilder confidence hits 6-year high

Homebuilders grew more confident in the housing market in October, hitting the highest level in more than six years, another sign of the sector's steady improvement. 

Confidence increased by a point to 41, the sixth straight month of increases and the best showing since June 2006, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released Tuesday. 

"The slight gain in builder confidence this month is an indication that, while still moving forward, the speed at which the housing recovery is proceeding is being moderated by the various constraints such as tight credit, difficult appraisals and more recently, the limited inventory of buildable lots in certain markets," said David Crowe, NAHB's chief economist. 

Any number of at least 50 indicates a healthier market. 

Following large increases in September, the components measuring current sales conditions and sales prospects for the next six months each remained unchanged in October at 42 and 51, respectively. 

Meanwhile, the component measuring traffic of prospective buyers increased five points to 35, its highest level since April 2006.

Builder confidence improved in three out of four regions in October. 

Based on three-month moving averages, the index gained two points in the Midwest and West to 42 and 44, respectively, and three points in the South, to 39. The Northeast's index was unchanged at 29.

"Many builders are reporting increases in the number of serious buyers visiting their sales offices, and the overall confidence measure is much higher than it was at this time last year," said NAHB Chairman Barry Rutenberg, a homebuilder from Gainesville, Fla.

"The concern is that, even though demand for new homes is rising, overly tight credit conditions are still constraining new building and new purchases at a time when that kind of economic activity and the job growth it generates are greatly needed."