U.S. homebuilders are feeling more optimistic about the housing market, lifting their confidence this month to the highest level in 10 years.
The National Association of Home Builders/Wells Fargo builder sentiment index released Monday rose this month to 64, up from 61 in September. The last time the reading was higher was October 2005 at 68.
Readings above 50 indicate more builders view sales conditions as good rather than poor. The index has been consistently above 50 since July last year.
Builders' improved optimism bodes well for a pickup in new home construction, which could help give the U.S. economy a boost. The supply of new homes has been scarce, so greater construction could result in more sales.
The latest builder index reflects a gradual, but consistent strengthening in the market for new homes, said David Crowe, the NAHB's chief economist.
"With firm job creation, economic growth and the release of pent-up demand, we expect housing to keep moving forward as we start to close out 2015," he said.
Builders' view of current sales conditions and their outlook for sales over the next six months surged. A measure of traffic by prospective buyers held steady.
Healthy hiring and smaller price increases for new homes have begun pushing up sales, which were hammered during the Great Recession and recovered slowly even after the downturn ended in 2009. New-home sales have soared nearly 22 percent in the past year. They hit a seasonally adjusted annual rate of 552,000 homes in August, the strongest pace since February 2008. September's sales data are due out next week.
This month's builder index was based on 384 respondents.
Builders' view of current sales conditions for single-family homes rose three points to 70, the highest reading since October 2005. Builders' outlook for sales over the next six months surged seven points to 75. That's the highest reading since August 2005. A measure of traffic by prospective buyers held steady at 47.
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.
This story has been corrected to reflect that new home sales figures were from August, not September.