Builder confidence increased from 19 to 22 from April to May, which is the highest level the association's Housing Market Index has seen since August 2007. A level above 50 on the scale indicates more builders feel the market for new single-family home is good rather than poor.
Bob Jones, NAHB chairman, said the response from builders was probably tied to the government's tax credit for home purchases. Through the credit - which ended on April 30 - new buyers could have gotten up to $8,000, while repeat purchasers were eligible for as much as $6,500.
"Builders are also hopeful that the solid momentum that the tax credits initiated will continue even now that those incentives are gone," Jones said.
Although it showed improvement, NAHB chief economist David Crowe said the HMI is still low when compared to past levels. He also noted that increasing foreclosures and higher building costs will present continued difficulties for the new home market.
