Homebuilder sentiment perked up in December for the third month in a row, to its highest level in a year and a half, the National Association of Home Builders said on Monday.
The NAHB/Wells Fargo Housing Market index rose to 21 from a downwardly revised 19 in November, the group said. Economists polled by Reuters had predicted a reading of 20.
The index was at its highest level since May 2010.
"While builder confidence remains low, the consistent gains registered over the past several months are an indication that pockets of recovery are slowly starting to emerge in scattered housing markets," NAHB Chairman Bob Nielsen said in a statement.
After stagnating in a tight range for about a year, the index has been improving since October, giving weight to analysts' views that the housing market is finally finding a bottom.
Even with December's gain, home builder sentiment is still historically low and well below the 50 mark, indicating more builders view market conditions as poor than favorable. The index has not been above 50 since April 2006.
"We're not looking for numbers next year to come anywhere close to the kind of numbers that we saw pre-recession, but we do think the housing market is setting up for a plus year in 2012 in terms of new home construction, as well as sales," said Steve Blitz, senior economist at ITG Investment Research in New York.
The current sales component rose to 22 from 20, while the gauge of sales expectations for the next six months rose to 26 from 25.
There was little impact in financial markets from the data as investors focused on developments in the euro zone and uncertainty following the death of North Korean leader Kim Jong-il.
(Reporting By Leah Schnurr; Editing by Dan Grebler)
Copyright 2011 Thomson Reuters. Click for Restrictions.