SPDR S&P Homebuilders ETF (NYSEArca: XHB) is trading at the highest levels in over five years as the housing sector continues to lead the U.S. stock market higher in 2012.

Builder confidence in the market for newly built, single-family homes rose for an eighth consecutive month in December to a level of 47 on the National Association of Home Builders/Wells Fargo Housing Market Index, according to a report Tuesday.

The industry confidence index rose to its highest level since April 2006. [Will Homebuilder ETFs Maintain Momentum in 2013?]

“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,” said NAHB Chairman Barry Rutenberg. “However, 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.”

“While there is still much room for improvement, the consistent upward trend in builder confidence over the past year is indicative of the gradual recovery that has been taking place in housing markets nationwide and that we expect to continue in 2013,” added NAHB Chief Economist David Crowe.

SPDR S&P Homebuilders ETF is up 55.3% year to date, while iShares DJ US Home Construction (NYSEArca: ITB) has vaulted 77.4%, according to Morningstar. The builder sector ETFs gained nearly 2% on Tuesday.

“Today’s data further supports our thesis that the housing market is recovering, albeit at a fairly slow pace and subject to bumps along the way,” Sterne Agee analysts said in a MarketWatch report.

SPDR S&P Homebuilders ETF

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