US homebuilder confidence surges to six-year high

LOS ANGELES (AP) — Confidence among U.S. homebuilders rose this month to its highest level in six years and many expect the housing recovery will strengthen in the next six months.

The National Association of Home Builders/Wells Fargo builder sentiment index released Tuesday increased to 40 in September. That’s up from 37 in August and the highest reading since June 2006, just before the housing bubble burst.

Any reading below 50 indicates negative sentiment about the housing market. The index hasn’t reached that level since April 2006, the peak of the housing boom.

Still, a measure of builders’ outlook for sales in the next six months rose to 51. That’s up from 43 in August and also the highest level since June 2006.

Builders also reported seeing the best sales level since July 2006. And turnout by prospective buyers returned to levels not seen since May 2006.

The positive trends have helped bolster optimism that the U.S. housing recovery will endure.

“We think things have turned around and this recovery is sustainable,” said Patrick Newport, an economist with IHS Global Insight.

The survey, which is based on responses from 445 builders, has been trending higher since October. After a dismal 2011, homebuilders have seen their fortunes begin to turn around this year as the housing market recovery has steadily gained momentum.

Sales of both new and previously occupied homes are running ahead of last year. Home prices are increasing more consistently, in part because the supply of homes has shrunk and foreclosures have eased. And mortgage rates remain near record lows, beckoning potential buyers with good credit.

Still, the housing market remains depressed. While the turnaround will continue next year, a complete recovery in home construction isn’t expected before 2016, Newport said.

The housing market isn’t expected to recover fully until job growth improves and the unemployment rate, now at 8.1 percent, declines further.

Still, sales remain on the upswing at Taylor Morrison, which builds homes in five U.S. states and caters to entry-level and move-up buyers, as well as seniors.

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