Dec. 15 (Bloomberg) -- Confidence among U.S. homebuilders unexpectedly fell in December on concern the lack of jobs and tight credit will limit a recovery.

The National Association of Home Builders/Wells Fargo index of builder confidence decreased to 16, the lowest level since June, from 17 in a November, the Washington-based group said today. Readings below 50 mean most respondents view conditions as poor.

Mounting foreclosures and an unemployment rate forecast to average 10 percent next year indicate housing will take time to rebound from the worst slump in the post-World War II era. Cheaper homes, lower borrowing costs and an extension of a buyer tax credit are laying the groundwork for companies including Toll Brothers Inc. to revive construction projects.

“This is shaping up to be a bumpy recovery period for the housing market,” David Crowe, the NAHB’s chief economist, said in a statement. “Tight lending conditions for both consumers and home builders continue to pose considerable obstacles on the road to a sustained housing and economic recovery.”

The builder confidence index was forecast to increase to 18 this month, according to the median forecast of 47 economists surveyed by Bloomberg News. Projections ranged from 17 to 20. The index, first published in January 1985, averaged 16 last year. The builders group’s index of current single-family home sales fell to 16 in December from 17 the prior month.

The gauge of buyer traffic was unchanged at 13 for a third straight month. A measure of sales expectations for the next six months dropped to 26 from 28.

Drop in Midwest

The drop in confidence was concentrated in the Midwest, where the index fell to 12 in December from 14. Two of the four regions showed increases, led by the Northeast, which rose to 23 from 20. In the West, the gauge climbed to 19 from 18. Confidence was unchanged in the South at 17.

President Barack Obama in November extended until April 30 a tax credit of as much as $8,000 for first-time homebuyers and expanded it to include a smaller incentive for some current owners.

Housing has bottomed, distressed property sales and foreclosures have abated, and inventories are trimmer, Robert Toll, chief executive officer of Horsham, Pennsylvania-based Toll, the largest U.S. luxury homebuilder, said last week.

“We don’t know how fast we’re coming back, but we do know we’re coming back,” Toll said in a Bloomberg Television interview on Dec. 11. “There’s a pretty good reservoir of pent-up demand.”

The labor market remains weak. The jobless rate may stay above 10 percent through the first half of 2010, according to a Bloomberg survey this month. Foreclosure filings will reach a record for the second straight year with 3.9 million notices sent to homeowners in default, RealtyTrac Inc. said last week.

To contact the reporter on this story: Shobhana Chandra in Washington schandra1@bloomberg.net