U.S. homebuilders are less pessimistic about the struggling housing market, but not enough to signal a recovery any time soon.
The National Association of Home Builders said Tuesday that its index of builder sentiment this month rose from 14 to 18.
Any reading below 50 indicates negative sentiment about the housing market. It hasn't reached 50 since April 2006, the peak of the housing boom. The index has been below 20 for all but one month during the past two years.
Last year, the number of people who bought new homes fell to its lowest level dating back nearly a half-century. Sales this year haven't fared much better.
Builders are struggling to compete with foreclosures, which have made the price of previously occupied homes more competitive. Many buyers are having difficulty obtaining loans or meeting higher down payment requirements. Low appraisals are scuttling some deals after contracts have been signed. Some buyers want to upgrade to a new house but are holding off because they can't sell their home.
David Crowe, the builders group's chief economist, said some builders are shifting their assessment from "poor" to "fair," but few are changing their views from "fair" to "good."
The trade group has identified several pockets of strength. Home construction, prices and employment have been improving in those areas.
The two biggest cities cited _ New Orleans and Pittsburgh _ were suffering through economic downturns during the housing boom. New Orleans is rebuilding after Hurricane Katrina in 2005; Pittsburgh has evolved from a city dependent on the steel industry to a diverse economy with jobs in health care, education and technology.
Smaller metro areas where energy and agriculture are the primary economic drivers have also shown improvement, the trade group said. Of 23 "improving" metro areas highlighted by builders, seven are located in Texas alone.
While new homes make up a small portion of sales, they have an outsize impact on the economy. The builders' trade group says each new home built creates an average of three jobs for a year and generates about $90,000 in taxes.
Separate gauges of current single-family home sales and foot traffic of prospective buyers increased four and three points each, to 18 and 14, respectively. A survey of sales expectations over the next six months rose seven points, to 24.
An index of builders' outlook in the West rose nine points, to 21. The Midwest and South rose 4 points, to 15 and 19, respectively. The Northeast was unchanged at 15.