December's gains in sentiment are not as dramatic as the jump in November, as some builders are likely concerned about the possibility of going over the so-called "fiscal cliff." Some builders have already reported laying off workers and delaying projects, concerned that much-needed capital for construction will dry up if a deal cannot be reached by the end of the year.
Last week the CEO's of 18 home building companies, who collectively build 30 percent of the nation's new homes, sent a letter to President Barack Obama and House Speaker John Boehner urging them to avoid the fiscal cliff, even if it means raising taxes on the builders:
"We support a comprehensive agreement in Washington to avoid the fiscal cliff that includes revenue increases (including tax rate adjustments) together with meaningful entitlement reforms. We believe that a properly balanced agreement will breed confidence in the political system and the U.S. economy, will enable the housing market to continue its recovery, and, in turn, will promote broader economic growth."
The letter was signed by the CEOs of publicly traded builders including Beazer Homes, Hovananian Enterprises, KBHome, Lennar, MDC, and Meritage.
(Read More: Best US Housing Markets for Buyers and Sellers)