With the inventory of distressed homes declining in the United States, builders have seen increasing demand, which led to a bump in their confidence, according to the National Association of Home Builders.
The NAHB/Wells Fargo Housing Market Index showed a five point gain in builder confidence, which marked the seventh consecutive month of gains. The index currently sits at 46 and is at the highest level since May of 2006.
"While our confidence gauge has yet to breach the 50 mark – at which point an equal number of builders view sales conditions as good versus poor – we have certainly made substantial progress since this time last year, when the HMI stood at 19," said NAHB chief economist David Crowe.
In addition to the declining distressed inventory, record low mortgage rates have also helped spur housing demand. According to Freddie Mac, 15- and 30-year fixed-rate mortgages both hit new lows as of the week ending November 15. As long as rates stay low, builder confidence could continue to see improvement.