Builder confidence has rebounded to levels not seen since 2006, according to a report released today by the National Association of Home Builders (NAHB). The NAHB/Wells Fargo Housing Market Index rose to 40 this month, continuing a five-month upward trend. The number would have to climb to over 50 to indicate that more builders view sales conditions as good than poor.

Source: nahb.org

"Builders across the country are expressing a more positive outlook on current sales conditions, future sales prospects and the amount of consumer traffic they are seeing through model homes than they have in more than five years," said NAHB Chief Economist David Crowe in a press release.

In the past six months, some real estate and home construction stocks have been on a rise as well:

Company/Fund

Stock Price Percentage Change

PulteGroup 76%
Zillow 31%
iShares Dow Jones U.S. Home Construction Index Fund 31%
SPDR S&P Homebuilders Index Fund 18%

Source: ycharts.com

Crowe warned that a lack of building lots in some markets and the rising costs of building materials may continue to hinder growth in the near future. The NAHB/Wells Fargo Housing Market Index includes gauging builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” Although the index continues to rise, its sub-50 rating still means that the majority of builders consider sales conditions not good.

Fool contributor Justin Loiseau owns shares of Zillow. You can follow him on Twitter, @TMFJLo, and on Motley Fool CAPS, TMFJLo.

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