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Happy holiday for homebuilders

By Judy Martel · Bankrate.com
Wednesday, December 19, 2012
Posted: 3 pm ET

Optimism among single-family homebuilders continues to increase in December, due to the number of serious buyers emerging and a reduction in distressed properties weighing down the market.

The National Association of Home Builders/Wells Fargo Housing Market Index measuring builder sentiment is at 47, up from 21 in December of last year and the highest since April 2006. A reading of 50 is considered the break-even point between positive and negative sentiment.

The index is made up of three components: home sales, which rose two points to 51; sales expectations over six months, which dropped one point to 51; and buyer traffic, coming in the lowest of the three components at 36, though it rose one point.

Builders in the Northeast are the most optimistic; the index there rose 12 points from November. In the Western region, sentiment fell by three points. It fell by two points in the South and one point in the Midwest, though the Midwest is the only region that has a positive index.

There are many factors that go into a successful housing market, however. Difficulty in qualifying for a mortgage is still an obstacle for borrowers, Barry Rutenberg, chairman of National Association of Home Builders, noted in a news release.

But chief economist David Crowe said that, "While there is still much room for improvement, the consistent upward trend in builder confidence over the past year is indicative of the gradual recovery that has been taking place in housing markets nationwide and that we expect to continue in 2013."

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