Real Estate

Home builder confidence hits highest level of year, up 5 points

Sentiment among U.S. home builders took a sharp jump in June to the highest level of the year, despite rising costs for consumers.

Builder confidence rose five points to 59 from May's reading on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI).

Construction workers add a roof to a new home in the Andalucia neighborhood of The Dominion gated community in San Antonio, Texas.
Matthew Busch | Bloomberg | Getty Images

This is the highest reading since September, 2014. Anything over 50 is considered positive sentiment. Last June, builder sentiment stood at 49, just before moving into positive territory, where it has remained ever since.

Read MoreBanks annihilating 'zombie' foreclosures

"Builders are reporting more serious and committed buyers at their job sites and this is reflected in recent government data showing that new-home sales and single-family construction are gaining momentum," said NAHB Chairman Tom Woods, a home builder from Blue Springs, Missouri.

Sales of newly built homes in April (the latest reading available) were 26 percent higher than a year ago, according to the U.S. Census, and housing starts were 9 percent higher. Builders are seeing strong demand, due to very limited supply of existing homes for sale, but the price premium on new construction has been holding some buyers back. The median sale price of a newly built home in April was $297,300, an increase of 8.3 percent from April of 2014.

Of the HMI's three builder confidence components, current sales conditions rose seven points to 65, sales expectations over the next six months rose 6 points to 69, and buyer traffic rose five points to 44. That last component the only one still mired in negative territory.

Read MoreEfforts to help homeowners fail their troubled mortgages

Regionally, on a three-month moving average, builder confidence in the South and Northeast each rose three points to 60 and 44, respectively. The West gained two points to 57 while the Midwest dropped by one point to 54.