Builder confidence for newly built, single-family homes increased in December, reaching levels seen in 2005, indicating construction in the housing market may pick up in coming months.
The housing market index for the National Association of Home Builders increased four points to a reading of 58 in December. Any reading over 50 indicates expansion for the market.
"This is definitely an encouraging sign as we move into 2014," NAHB chairman Rick Judson, said in the report. "The HMI is up 11 points since December of 2012 and has been above 50 for the past seven months. This indicates that an increasing number of builders have a positive view on where the industry is going."
"The recent spike in mortgage interest rates has not deterred consumers as rates are still near historically low levels," NAHB chief economist David Crowe said in the report. "Following a two-month pause in the index, this uptick is due in part to release of the pent-up demand caused by the uncertainty generated by the October government shutdown. We continue to look for a gradual improvement in the housing recovery in the year ahead."
The index measuring current sales conditions increased six point to 64, while the index for expectations for future sales jumped two point to 62. The index measuring traffic of prospective buyers increased three points to 44.
Regionally, the Northeast, Midwest and West each fell a single point in the three-month HMI averages, with only the South reporting an increase.