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US homebuilder confidence has risen to its strongest level in nearly 12 years this month, as strength in the jobs market and improving wages continue to bolster demand for homes.

The NAHB/Wells Fargo Housing Market index jumped to 71 in March from 65 the previous month, the National Association of Home Builders said on Wednesday. That’s the gauge’s highest level since June 2005 and comes in well ahead of analysts forecast of no change.

Readings below 50 mean that more builders view market conditions as poor than favourable. The index has been running above 50 since June 2014.

“Although the March result could have been boosted by an unusually warm February (these data, while called “March”, largely reflect conditions in much of February), the message clearly remains one of optimism that single family starts are going to continue to gain ground,” said Joshua Shapiro, chief US economist at MFR.

NAHB chairman Granger MacDonald said builders are buoyed by President Donald Trump’s actions on regulatory reforms, particularly his recent executive order to rescind or revise the waters of the US rule that impacts permitting.

Still NAHB economist Robert Dietz warned that while builders are clearly confident, he expects moderation in the index moving forward.

“Builders continue to face a number of challenges, including rising material prices, higher mortgage rates, and shortages of lots and labor,” he said.

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