U.S. home builder sentiment rose for the fifth month in a row in September to its highest level in over six years in a fresh sign of momentum for the housing market, a report from the National Association of Home Builders showed on Tuesday.
The NAHB/Wells Fargo Housing Market index climbed to 40 from August’s 37, topping economists’ forecasts for 38, according to a Reuters poll.
The measure was at its highest level since June, 2006, and is up 26 points from a year ago as the housing market has started to turn a corner.
The index is also creeping closer to the 50 mark that shows more builders view market conditions as favourable than poor. It has not been above 50 since April 2006.
September’s report “provides further assurance that the housing market is moving in a positive direction, but there’s still a long way to go on the road to recovery and several obstacles are slowing our progress,” NAHB chairman Barry Rutenberg said in the statement.
Mr. Rutenberg said tight lending conditions are a roadblock that is preventing many builders from putting construction crews back to work and discouraging potential home buyers.
The single-family home sales component rose to 42 from 38. The gauge of single-family sales expectations for the next six months jumped to 51 from 43, while prospective buyer traffic edged up to 31 from 30.
The Federal Reserve last week announced an aggressive new stimulus program in which it will buy $40-billion (U.S.) a month in mortgage-backed securities to keep borrowing rates low and help bolster the housing sector further.
The central bank said it will make purchases until it sees a sustained upturn in the jobs market.
Fed chairman Ben Bernanke said he was hopeful the housing market will continue to see progress, referring to the sector as “a missing piston” in the U.S. recovery.