2/15/2012 10:32 AM ET
(RTTNews) - Homebuilder confidence increased for the fifth consecutive month in February, according to a report released by the National Association of Home Builders on Wednesday, with the index of homebuilder confidence jumping to its highest level in more than four years.
The report showed that the NAHB/Wells Fargo Housing Market Index surged up to a reading of 29 in February from a reading of 25 in January. Economists had been expecting the index to edge up to a reading of 26.
With the much bigger than expected increase, the index rose to its highest level since coming in at a reading of 30 in May of 2007.
"This is the longest period of sustained improvement we have seen in the HMI since 2007, which is encouraging," said NAHB Chief Economist David Crowe. "However, it is important to remember that the HMI is still very low, and several factors continue to constrain the market.
"Foreclosures are still competing with new home sales, and many builders are seeing appraisals come in at less than the cost of construction," he added. "Additionally, prospective home buyers are finding it difficult to qualify for a mortgage."
The sharp increase by the housing market index reflected continued increases by each of the three component indexes, which also improved for the fifth consecutive month.
The component measuring traffic of prospective buyers edged up to 22 in February from 21 in January, while the component measuring sales expectations for the next six months jumped to 34 from 29. The component measuring current sales also surged up to 30 from 25.
The report showed a more mixed picture for the four regions of the country.
The index for the West spiked to 44 in February from 21 in January, and the index for the Midwest rose to 30 to 24.
On the other hand, the index for the Northeast fell to 21 in February from 23 in January, and the index for the South dipped to 25 from 28.
Jennifer Lee, Senior Economist at BMO Capital Markets, said, "All in, this is yet another sign of improvement in the housing sector, which is greatly needed. As Chairman Bernanke said last week, the housing sector is holding back the economic recovery."
Thursday morning, the Commerce Department is scheduled to release its report on new residential construction in the month of January. Economists expect housing starts to increase to an annual rate of 675,000 from 657,000 in the previous month.
by RTT Staff Writer
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