Builder confidence in the market for newly built, single-family homes climbed for a second consecutive month in May to the highest level since last September, according to the NAHB/Wells Fargo Housing Market Index (HMI). May’s HMI rose two points to 16.

"The fact that the May HMI continued to tick up from April's five-point increase confirms that last month’s improved confidence level was no fluke," added NAHB Chief Economist David Crowe. "This continued increase indicates that home builders feel we're at or near the bottom of the market and that positive signs lie ahead for builders and potential home buyers, provided that builder access to production credit significantly improves."

Crowe also noted that the recently announced plan by the Department of Housing and Urban Development to enable home buyers to use the new $8,000 tax credit at the closing table is especially encouraging. "We appreciate Secretary Donovan's efforts to make the tax credit more useful to buyers by addressing the biggest hurdle to first-time purchasers — having enough cash for a suitable downpayment," he said.

Derived from a monthly survey that NAHB has been conducting for more than 20 years, the HMI gauges builder perceptions of current single-family home sales, sales expectations for the next six months and the traffic of prospective buyers. Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

Two of the three HMI component indexes rose in May. The index gauging current sales conditions rose two points to 14, and sales expectations for the next six months rose three points to 27. Traffic of prospective buyers remained unchanged from the prior month, registering 13.

Regionally, builder confidence climbed three points to 18 in the Northeast, one point to 18 in the South and four points to 12 in the West. The Midwest held even at 14.