The increased activity in the US housing market has lifted the confidence of home builders in the country. The National Association of Home Builders (NAHB) reported that its Housing Market Index surged four points this month to 19, the highest reading since September last year. The index exceeded the forecasts made by economists surveyed by Reuters. They expected the index to rise to 16.

The NAHB attributed the rise in sentiment to the fast-approaching deadline of the first-time home buyer tax credit, which is prompting many buyers to put houses under contract before the program ends this month. “An expected surge in buyer activity leading up to the expiration of the home buyer tax credits and a gradually improving economy helped to brighten builders’ view of the marketplace in April,” NAHB chief economist David Crowe said.

However, builders are less hopeful beyond this month. Many economists expect house sales to dip again in the second half of the year because of the expiration of the first-time home buyer tax credit. The high unemployment rate and tight lending policies imposed by lenders are also expected to contribute to the anticipated drop in home sales.

Crowe said the federal government needs to address the housing market and employment issues in order for the home building sector to recover from the recession. “Greater economic growth, particularly in the job market, and the abatement of these housing issues are needed to help move home building to a more sustained recovery,” he added. The home builder confidence index has not been above the 50 level since April 2006. A reading below 50 suggests that more builders view sales conditions as poor than good.

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