Builders of single-family homes are feeling their most confident since March 2007, again stirring hopes the housing recovery has staying power.
A monthly builder sentiment index from the National Assn. of Home Builders and Wells Fargo rose two points in August to 37. The gauge hasn't breached 50 – the level at which overall sentiment is positive – since 2006.
But according to several measures, the construction industry has plenty of reasons to be more chipper than in recent years.
Homebuilders reported the best current sales and the most optimistic six-month outlook for sales in five years. Turnout by prospective buyers is at its highest point in six years.
But confidence in the western part of the country slipped three points to 40 on the index, according to the trade group.
"While there is still much room for improvement, we have come a long way from the depths of the recession and the outlook appears to be brightening," said Barry Rutenberg, the association's chairman, in a statement.
But in a sign of "gradual strengthening," according to NAHB Chief Economist David Crowe, builders broke ground on the most homes in June in nearly four years.
Prices of starter homes in Southern California are rising, as more buyers are willing to shell out a premium. Sales in the region fell 6.7% in July from June but were up 13.8% from July 2011.
"However, we are still at a very fragile stage of this process and builders continue to express frustration regarding the inventory of distressed properties, inaccurate appraisal values and the difficulty of accessing credit for both building and buying homes," Crowe said.