Homebuilder sentiment rose more than expected this month to 58, matching August's reading as the highest since November 2005. Economists surveyed by Thomson Reuters anticipated a smaller increase to 55 from 54 in November. A reading above 50 in the NAHB index means that more home builders view conditions as good than poor.
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There is a very strong positive correlation between homebuilder sentiment and the performance of homebuilder stocks. The divergence we see at the far right suggests that home builders are less concerned about the effects of Fed tapering and rising interest rates than stock market investors are:
Homebuilder stocks are mixed immediately after the release of the December NAHB report. The year-to-date performance is mixed as well. Keep in mind that most of these stocks doubled in value in 2012: