US homebuilder sentiment improved in December, rising to its highest level in a year and a half and reinforcing the view the housing market is slowly healing. The National Association of Home Builders/Wells Fargo Housing Market index rose to 21 from a downwardly revised 19 in November, the group said on Monday. Economists polled by Reuters predicted a reading of 20.
It was the third monthly gain in a row and put the index at its highest level since May 2010. November was originally reported at 20. After stagnating in a tight range for about a year, the index has been improving since October, giving weight to analysts' views that the housing market is finally finding a bottom.
Even with December's gain, home builder sentiment is still historically low and well below the 50 mark, indicating more builders view market conditions as poor than favourable. The index has not been above 50 since April 2006. The current sales component rose to 22 from 20, while the gauge of sales expectations for the next six months rose to 26 from 25.
The beleaguered housing market is one of the main hurdles for the economic recovery as a glut of inventory and little buying demand has kept pressure on prices. The National Association of Realtors will be revising down figures for sales of previously owned homes from 2007 through October 2011 because of double counting. A drop of 10 to 20 percent would put the NAR's figures back in line with other data, according to IFR Markets, a unit of Thomson Reuters.
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