NEW YORK (TheStreet) -- Homebuilders are getting much more confident about the economy as the summer wears on -- and their stocks should reap the benefits soon.
Homebuilder confidence pierced a pivotal level in July's survey by the Wells Fargo and the National Association of Home Builders, reaching 51 on a 100-point scale for the first time since January, when the polar vortex began cutting into sales. The index measuring today's sales conditions increased four points to 57, while the index measuring expectations for future sales rose six points to 64, the survey said. Traffic of prospective buyers increased three points to 39 on the survey's scale.
Investors should be moving now to consider whether this means building stocks can finally shake off their recent torpor -- most builders have trailed the broader market this year. Earnings reports begin next week, with NVR (NVR) reporting Monday, followed by Pulte Home (PHM), D.R. Horton (DRI) and Meritage Homes (MTH). Ryland Homes (RYL) delivers numbers on July 31.
"The builders are still in the third or fourth inning of the recovery,'' Morningstar analyst Jim Krapfel said. "The confidence numbers are encouraging and build on new home sales and permits for May."