NAHB Builder Confidence Highest Since May 2010

Homebuilders are more optimistic than they've been about single-family home sales in a year and a half according to a report released today by the National Association of Home Builders.

The Housing Market Index rose to 21 versus consensus estimates of 20.  Last month's reading was revised down from 20 to 19. 

Despite the moderate pace of the increase, this is the highest level since May 2010, and begins a week of generally improving expectations across several housing-related economic reports.  Tomorrow's Housing Starts, Wednesday's Existing Home Sales, and Friday's New Home Sales are all expected to have improved marginally over previous reports.  The economic calendar also includes the Mortgage Banker's Association weekly report on mortgage applications, FHFA's Home Prices, and Building Permits (see the full calendar in The Week Ahead)

There has been some recent speculation that housing market data could be on the verge of a shift, potentially moving away from an extended period of stagnant, historically low levels.  While today's NAHB Confidence level does show some promise relative to recent months and years (apart from May 2010, it's the highest since 2007), it would have a long climb ahead in order to ever regain its pre-meltdown levels:

NAHB Chairman Bob Nielsen Notes "While builder confidence remains low, the consistent gains registered over the past several months are an indication that pockets of recovery are slowly starting to emerge in scattered housing markets."

More specific components of today's report showed the index of prospective buyers rose to 18 from November's reading of 15 while the 6-month outlook edged slightly higher from 25 to 26.

ABOUT THE DATA: The NAHB/Wells Fargo Housing Market Index measures the strength of the single-family housing market each month through surveys of NAHB members.

The survey asks respondents to rate market conditions for the sale of new homes at the present time and in the next 6 months as well as the traffic of prospective buyers of new homes.

The index can range between 0 and 100. " Any number over 50 indicates that more builders view conditions as good vs. poor.