Builder confidence hits nearly seven-year high

Builder confidence hit a nearly seven-year high in December as the housing market shows broader signs of recovery. 

Sentiment for the newly built, single-family home market increased for an eighth consecutive month to 47, a gain of two points and the highest level since April 2006, the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), reported on Tuesday. 

"Builders across the country are reporting some of the best sales conditions they've seen in more than five years, with more serious buyers coming forward and a shrinking number of vacant and foreclosed properties on the market," said NAHB Chairman Barry Rutenberg, a home builder from Gainesville, Fla. 

"However, one thing that is still holding back potential home sales is the difficulty that many families are encountering in getting qualified for a mortgage due to today's overly stringent lending standards."

The index is inching closer to the 50 level that indicates positive sentiment. 

Two of the HMI's three component indexes are now above that level.

The component gauging current sales expectations rose two points to 51 in December, while the index of sales expectations in the next six months fell one point, to 51. The component measuring traffic of prospective buyers increased one point, to 36.

"While there is still much room for improvement, the consistent upward trend in builder confidence over the past year is indicative of the gradual recovery that has been taking place in housing markets nationwide and that we expect to continue in 2013," said David Crowe, NAHB's chief economist.

In October 2011, the index stood 30 points lower at 17.