Homebuilder Confidence Improves

U.S. home-builder confidence rose in May to the highest level in more then 2.5 years said the National Association of Home Builders. Confidence was undoubtedly boosted by the homebuyer tax credit and the strengthening economy.

The NAHB/Wells Fargo Housing Market Index increased 3 points to 22 in May, the highest since August 2007. Economists polled by Reuters expected a reading of 20. A reading below 50 indicates more builders view sales conditions as poor than good.

All three subindexes of the Housing Market Index, including a measure of future homebuilding activity, saw solid gains this month. The current sales conditions guage rose three points to 23, the highest level since July 2007. The sales expectations measure for the next six months also gained three points to 28, the highest in six months. The traffic of prospective buyers index increased three points to 16, the highest since September.

Despite the improvement, tight credit and foreclosures remain big obstacles to a healthier housing market.