REFILE-UPDATE 1-US home builder confidence highest in over 6-1/2 years

Tue Dec 18, 2012 11:22am EST

(Adds dropped word "to" in first paragraph)

* Home builder sentiment index strongest since April 2006

* Current home sales reading rises above 50

NEW YORK, Dec 18 (Reuters) - U.S. home builder confidence rose to its strongest level in more than 6-1/2 years in December, reinforcing the view that the housing market is on track for further improvement and will help the U.S. economy.

The NAHB/Wells Fargo Housing Market index rose to 47 this month, its highest level since April 2006, from a downwardly revised 45 in November, the National Association of Home Builders said on Tuesday.

Economists polled by Reuters had predicted the index would be 47. The November reading was originally reported at 46.

Readings below 50 mean more builders view market conditions as poor than favorable. The index has not been above 50 since April 2006.

"Builders across the country are reporting some of the best sales conditions they've seen in more than five years, with more serious buyers coming forward and a shrinking number of vacant and foreclosed properties on the market," NAHB Chairman Barry Rutenberg, a home builder from Gainesville, Fla. said in a statement.

"The index has been trending up pretty well. It has gained quite a bit the past several months. It's not surprising it's catching a breather," said Celia Chen, a housing economist at Moody's Analytics in West Chester, Pennsylvania.

An encouraging aspect of the latest figures was the component on current single-family home sales, which rose to 51 points from 49 in November.

"That's a pretty significant benchmark. We are going into a good territory," Chen said.

The report's sub-index on prospective buyers edged up to 36 from 35, while its sub-reading on sales over the next six months dipped to 51 from a revised 52 in November.

The real estate sector has recovered from its meltdown more than six years ago due to a spate of government mortgage programs and rock-bottom mortgage rates engineered by the Federal Reserve, but tight lending standards have restrained home sales.

"One thing that is still holding back potential home sales is the difficulty that many families are encountering in getting qualified for a mortgage due to today's overly stringent lending standards," Rutenberg said. (Reporting by Richard Leong; Editing by Chizu Nomiyama)