U.S. homebuilders are feeling more optimistic that sales will perk up in coming months as the spring home-selling season unfolds.
That would bode well for home construction, which slowed early this year as severe winter weather halted new projects in the Northeast and Midwest.
The National Association of Home Builders/Wells Fargo builder sentiment index released Wednesday rose four points to 56 this month, the highest level since January, from a revised reading of 52 in March.
Readings above 50 indicate more builders view sales conditions as good, rather than poor.
Builders' outlook for sales of single-family homes over the next six months surged to its highest level since December. Measures of current sales conditions and traffic by prospective buyers also rose.
The numbers are consistent with the NAHB's forecast for the U.S. housing market to recover at a steady, gradual pace this year.
"This uptick shows builders are feeling optimistic that the housing market will continue to strengthen throughout 2015," said David Crowe, the builder group's chief economist.
New home sales shot up in February to a seasonally adjusted annual rate of 539,000, the strongest performance in seven years. The increase was a bright spot as other parts of the housing markets have struggled this year, despite historically low mortgage rates and a sharp, yearlong upswing in hiring.
Sales of previously occupied homes in the first two months of 2015 have fallen behind the already weak pace set last year, according to the National Association of Realtors.
Severe winter weather led builders to pull back on the pace of single-family home construction and shutter construction sites. In February, builders started construction at a seasonally adjusted annual rate of 897,000 homes, a 17 percent plunge from the previous month.
Still, lower mortgage rates and job gains over the past year are among the factors pointing to stronger sales this spring buying season, traditionally the peak period for home sales. More sales would translate into ramped-up home construction.
The latest NAHB index was based on responses from 289 builders. Its measure of current sales conditions for single-family homes rose three points to 61, while a gauge of traffic by prospective buyers gained four points to 41. Builders' outlook for sales over the next six months rose five points to 64.
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.