All three components of the index rose in July. Current sales conditions rose five points to 60—the highest level since early 2006. The component gauging sales expectations in the next six months gained seven points to 67, and the component gauging traffic of prospective buyers rose five points to 45—marking the strongest readings for each since late 2005.

“Builders are seeing more motivated buyers coming through their doors as the inventory of existing homes for sale continues to tighten,” noted NAHB Chief Economist David Crowe. “Meanwhile, as the infrastructure that supplies home building returns, some previously skyrocketing building material costs have begun to soften.”Sales of newly built homes rose just over 2 percent from May to June. Single family housing starts were flat. But permits, considered a more reliable indicator, gained 1.3 percent month-to-month.

Article source: http://www.cnbc.com/id/100889688

(Read More: As Prices Rise, Banks Repossess More Homes)

All three components of the NAHB index were up substantially, but the index measuring buyer traffic, while up seven points, was still in negative territory at 40. The index gauging current sales conditions rose eight points to 56, and expectations for future sales rose nine points to 61.

Sentiment was also not consistent nationwide. Builders moved further into the positive in the Northeast, Midwest, and South, but confidence slipped in the West, according to a three-month moving average. The number of listings in the West has actually been rising lately, as banks speed up the foreclosure process and release more repossessed homes onto the market. Prices have also been jumping dramatically in markets such as Phoenix, Las Vegas and much of California, slowing sales of existing homes.

Article source: http://www.cnbc.com/id/100820613