Builder confidence rises to May 2007 level

Embracing the housing-market glass as half full, homebuilders reported their confidence in the market up a full five points this month, bringing their faith in the future of home construction to its highest level since May 2007.

The National Association of Home Builders/Wells Fargo Housing Market Index was 29 in May, up from 24 in April and 28 in March.

"Builders in many markets are reporting that buyer traffic and sales have picked back up after a pause this April," Barry Rutenberg, NAHB chairman and a builder from Gainesville, Fla., said in a news release. "It seems we have resumed the gradual upward trend in confidence that started at the beginning of this year, as stabilizing prices and excellent affordability encourage more people to pursue a new-home purchase." 

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While the numbers were significantly higher than they have been in recent months, and higher than analysts had predicted, they were still lower than 50, which would indicate that half the builders are optimistic and half pessimistic about the next six months.

• Homeowners still remodeling, rather than moving

In a speech Tuesday in Washington, Federal Reserve Governor Elizabeth Duke said that she sees indications the real-estate market is on the mend but that many challenges remain. "Notwithstanding these signs of improvement in the housing market," she said, "demand for owner-occupied housing remains stubbornly tepid."

• Number of improving markets is static

She mentioned problems with mortgage lending, including uncertainty over the future of Fannie Mae and Freddie Mac, as one impediment to recovery.

• Fewer new homes sold in March

David Crowe, the NAHB's chief economist, agreed. "The pace of this emerging recovery could be stronger were it not for the significant impediments that the market continues to face with regard to builder and consumer access to credit, inaccurate appraisals and, more recently, rising materials prices," he said in a news release.