Home builder confidence improves

The National Association of Home Builders reported today that confidence in the market for new, single-family homes reached the highest level since last September. The Housing Market Index added on to April's five point gain, rising two points to 16.

The index remains at very depressed levels - a reading below 50 marks the line between good and poor conditions - but the rebound from the extremely low reading of 8 in January is the latest signal that builder sentiment is improving and confirms that April's jump was not a fluke.

The NAHB pointed out that recent announcements by the Department of Housing and Urban Development that would enable home buyers to use the new $8,000 tax credit at the closing table are "especially encouraging."

But let's not get carried away. The housing market still faces plenty of steep hurdles. Unemployment is rising, home inventories are bloated, and consumer confidence, though improving, remains shaky. Still, the latest numbers are encouraging as a bottom in the housing market would go a long way toward laying a foundation in for an economic recovery. Keep in mind, housing normally leads and economic recovery.

Tomorrow,we will get a look at April housing starts and building permits. A preview is available at Examiner.com.