Builder confidence has been improving as well. The National Association of Home Builders/Wells Fargo builder sentiment index increased in November to the highest level since April 2006.
Cheaper borrowing costs are helping drive housing demand. A 30-year, fixed-rate mortgage averaged 3.35 percent in the week ended today, according to Freddie Mac. That is little changed from the 3.31 percent reached in late November that was the lowest in data going back to 1972
Policy makers are striving to keep rates low to spur an even bigger recovery in housing. The Federal Reserve, which has kept its benchmark interest rate near zero since 2008, this month said it would hold it low “at least as long” as unemployment remains above 6.5 percent and inflation projections are for no more than 2.5 percent.
Builders are seeing more serious buyers walk into showrooms, Toll Brothers Chief Executive Officer Douglas Yearley said. Purchase contracts are up 34 percent from a year ago, he said.
“Pent-up demand, rising home prices, low interest rates, and improving customer confidence motivated buyers to return to the housing market in fiscal year 2012,” Yearley said on a Dec. 4 earnings call. “As household formations accelerated and unsold home inventories dropped to record lows, the industry took further steps towards a sustained housing recovery.”