Builders Outlook Brightens

Washington — Builder confidence rose sharply in February, spurred by a jump in January home sales — but that was before the nation's home builders had a chance to read about a steep slide in February sales that erased all of the gain made the month before.

A monthly gauge of builder sentiment compiled by the National Association of Home Builders and Wells Fargo Bank jumped up more than 14% to a reading of 40 from 35 the month before. It was the highest level since June 2006.

"Builders are becoming increasingly convinced that the abrupt downslide in home sales is in their rear view mirrors and they see better times as they look at the road ahead," said David Seiders, NAHB chief economist. But two weeks after that rosy outlook, sales of new homes dived by more than 16% in February, likely setting the stage for a corresponding drop in the next reading of builder confidence, scheduled to be released in mid-March.

Prompting the uptick, in addition to strong January sales, were lower energy prices, favorable mortgage rates, and solid growth in employment and household income, said the economist.

Of particular note, said Seiders, builders were especially bullish about sales expectations for the next six months. There the index rose seven points and jumped over the threshold number of 50 for the first time since last June.