Home builder confidence in the U.S. posted an 18-year high of 74 in December, a five-point increase from a revised November reading of 69, the National Association of Home Builders said.
All three index components notched gains in December, NAHB reported, with buyer traffic rising eight points to 58 and current sales conditions climbing four points to 81. Sales expectations, which slipped one point a month earlier, posted a three-point increase to 79.
NAHB Chief Economist Robert Dietz said the eight-point increase in home buyer traffic index shows the demand for housing is on the rise.
"With low unemployment rates, favorable demographics and a tight supply of existing home inventory, we can expect continued upward movement of the single-family construction sector next year," he added.
The NAHB/Wells Fargo Housing Market Index measures builder confidence in the U.S. market for newly built single-family homes.