The first-time homebuyers' tax credit, along with low interest rates and home prices, may have led to builders feeling a bit better about the market for new, single-family homes.
According to the latest National Association of Home Builders/Wells Fargo Housing Market Index, builder confidence increased to 17 in February, up from the 15 reported through the index in January.
NAHB chairman Bob Jones said that a variety of factors, including the tax credit made available to first-time homebuyers, makes it attractive for consumers to buy homes at this time.
"As a result, builders are slightly more optimistic that the housing recovery is finally beginning to take root," Jones said.
Through the tax credit, first-time homebuyers have an $8,000 incentive to purchase a home, provided they sign a contract for the home by April 30. If they do so, prospective homeowners have until June 30 to complete the purchase.
Along with first-time homebuyers, the tax credit was expanded last year to include people who are purchasing a new permanent residence. Those buyers may qualify for a tax credit of $6,500, provided they sign by April 30.
Though the index did increase in February, it is still far from a level that might indicate more wide-spread confidence in the housing market. To calculate the index, builders are asked to rate both current and expected sales of single-family homes, while also being asked to gauge the amount of traffic they are getting from potential buyers.
A reading on the scale above 50 means that the number of builders who see conditions as "good" outpaced the number who see them as "poor." Though the index is still below 50, the 17 posted in February is the highest mark seen on the index since November 2009.