The brighter outlook reflects growing optimism that sales will increase over the next six months. That could potentially spur growth in home construction, a key driver of the economy.
The National Association of Home Builders/Wells Fargo builder sentiment index released Wednesday rose this month to 59, up four points from August. The index has risen four months in a row.
The latest reading is the highest since reaching 61 in November 2005, before the housing bubble burst.
Readings above 50 indicate more builders view sales conditions as good, rather than poor.
Builders' view of current sales conditions for single-family homes, their outlook for sales over the next six months and traffic by prospective buyers each increased in the latest survey.
The optimism comes despite a steady slowdown in U.S. sales of new homes this summer. Sales fell from a seasonally adjusted annual rate of 454,000 in May to a rate of 412,000 in July.
Still, sales of new homes are running ahead of last year's pace.
Economists project that sales accelerated in August to a rate of 429,000, according to FactSet. August sales figures are due out next week.
The U.S. economy added jobs at a solid clip through much of this year, though the gains slowed in August. Last month, employers added just 142,000 jobs, well below the 212,000 average of the previous 12 months.
The job gains this year and a pickup in home values have spurred homeowners to trade up to a nicer home. But fewer homes are being purchased by first-time homebuyers.
A mix of rising home prices, higher mortgage rates and meagre wage growth has made it more difficult for would-be homebuyers to purchase a newly built home, particularly first-time buyers.
Even so, many of the largest U.S. homebuilders have posted sales gains this year.
On Wednesday, Miami-based Lennar Corp. reported that its completed home sales climbed 9 per cent in the three months ended Aug. 31, while new home orders vaulted 23 per cent. Its shares added $2.66, or 6.8 per cent, to $41.79 in morning trading. The stock has risen 19 per cent in the last 12 months.
In the latest NAHB index, which was based on responses from 317 builders, builder confidence improved nationally and on a regional basis, with readings for the Midwest, West, Northeast and South all posting gains from last month.
The index gauging current sales conditions for single-family homes climbed five points to 63, the highest level since December. The builders' outlook for sales over the next six months rose two points to 67. The last time it was higher was a year ago.
Meanwhile, a measure of traffic by prospective buyers increased five points to 47, the highest level since October 2005.
Housing, while still a long way from the boom of several years ago, has been recovering over the past two years.
Though new homes represent only a fraction of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to NAHB data.Suggest a correction