Confidence among single-family home builders improved significantly in November, according to the National Association of Home Builders/Wells Fargo Housing Market Index, which gained five points from the previous month to a reading of 46. 

While the index remained below 50—the level at which the number of respondents who view sales conditions as good would equal the number of respondents who view them as poor—November’s reading was far above its year-ago level of 19. 

“Builders are reporting increasing demand for new homes as inventories of foreclosed and distressed properties begin to shrink in markets across the country,” said Barry Rutenberg, chairman at NAHB, in a statement discussing the numbers. “In view of the tightening supply and other improving conditions, many potential buyers who were on the fence are now motivated to move forward with a purchase in order to take advantage of today’s favorable prices and interest rates.” 

Two of the index’s three components registered gains this month, with the largest coming from the component measuring current sales conditions, which rose eight points to a reading of 49. The measure of sales expectations for the next six months saw a two-point gain to 53, and the component measuring traffic of prospective buyers was unchanged at a reading of 35. 

See NAHB’s full release discussing November’s builder confidence report.

Claire Easley is a senior editor at Builder.