Many of the large, publicly traded homebuilders have been reporting sharp growth in completed sales and new-home orders this year. And sales for privately held U.S. homebuilders are up 18 percent over the past year, according to data provider Sageworks Inc.
Rising mortgage interest rates could spell trouble for builders, however.
Mortgage rates spiked in June after Chairman Ben Bernanke indicated that the Federal Reserve could slow its bond purchases later this year. The bond purchases have kept long-term interest rates low, encouraging more borrowing and spending.
Last month, D.R. Horton Inc., the nation's largest homebuilder, said its pace of sales declined starting in May, when the rates started to creep higher.
Rates have since stabilized after Bernanke and other Fed members stressed that any change in the bond purchases are contingent on the economy's health.
Concerns over rising rates have hammered homebuilder stocks in recent weeks. The positive builder confidence index didn't appear to sway investors. Homebuilder shares were mostly trading lower Thursday morning.
In the latest builder survey, based on responses from 280 builders, a gauge of current sales conditions for single-family homes rose three points to 62, the highest level since January 2006.
Builders' outlook for single-family home sales over the next six months increased one point to 68, the highest reading since October 2005.
A measure of traffic by prospective buyers was unchanged at 45.
On a regional basis, confidence grew in the West, Midwest and South, but was unchanged among builders in the Northeast.