Housing Market Index hits 19-month high

Builder confidence improved for the third-straight month as the NAHB/Wells Fargo Housing Market Index increased from 18 to 19, the highest level in 19 months. The reading is still well below 50, which marks the line between optimism and pessimism but the trend is clearly showing that prospective new home buyers are wading back into the market.

The first time home buyer tax credit is creating some of interest while, low mortgage rates and improved affordability (falling prices) have also helped to create a firm foundation for housing.

"The component gauging sales expectations for the next six months slipped backward this month is a sign of their (builders) awareness that this is a very fragile recovery period and several major hurdles remain that could stifle the positive momentum," the chief economist for the NAHB said.

The NAHB also complained that a "critical lack of credit for housing production loans and continuing problems with low appraisals that are sinking one quarter of all new-home sales."

Groups tied to home builders have been lobbying Congress to extend the $8,000 tax credit for first-time home purchasers amid worries that demand could fall off after the credit expires.