U.S. Homebuilder Confidence Rises to Six-Month High

By Bob Willis (Bloomberg) — Confidence among U.S. home builders in April increased to the highest level since October, a sign low lending rates and government efforts to stabilize the housing market may be putting a floor on the industry’s slump.

The National Association of Home Builders/Wells Fargo index of builder confidence rose to 14 from 9 the prior month, the biggest gain since May 2003, the Washington-based NAHB said today. A reading below 50 means most respondents view conditions as poor.

Record-low mortgage rates and falling home prices are beginning to stir demand for housing after almost four years of declining sales. Still, inventories near record levels, spurred by foreclosures, indicate any recovery in housing will be lengthy as the economy remains mired in what may become the longest recession in seven decades.

“Builders are generally a hopeful bunch so it is no surprise that the stabilization in the broader economy fed through to the confidence index,” Tom Porcelli, a senior economist at Castlestone Management Ltd. in New York, said before the report. “We would only caution that hope is a soft foundation.”

The builder confidence index was expected to rise to 10 this month, according to the median estimate of 44 economists surveyed by Bloomberg News. Projections ranged from 8 to 12. The index reached a record low of 8 in January.
The gauge, first published in January 1985, averaged 16 last year.

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