NAHB Index Surged in April

The National Association of Home Builders released its April sentiment index earlier this afternoon. The index surged to 19 from 15 in March. That easily topped the 16 reading that economists were expecting. It’s also the highest reading since September 2009 (tie). You have to go all the way back to April 2008 to find a better one.

Among the subindices, the one tracking present sales jumped to 20 from 15, while the one tracking expectations about future sales inched up to 25 from 24. The subindex that follows buyer traffic rose to 14 from 10. Regionally speaking, the index was flat at 22 in the Northeast. It dropped to 13 from 15 in the West, but rose to 15 from 10 in the Midwest and spiked to 21 from 17 in the South.

The housing industry is in the midst of an upsurge, if the latest figures are to be believed. We saw a broad based rise in builder sentiment in April, with current sales and buyer traffic climbing significantly. The problem? It may be tax cut related. To qualify for the credit, you must have a signed contract on the table by April 30, with closings permitted through June. That may have prompted some fence-sitters to act — and builders may be leery of a hangover. Indeed, the index that tracks expectations about future sales barely budged.

Overall, I still believe the housing recovery is on track. Lower home prices and cheap mortgage financing have conspired to drive affordability higher. The gradual improvement in the economy and job market are also helping underpin sales. But I still don’t see a vigorous rebound, just a slow-but-steady turn in a beaten-down sector.