The housing market is rebounding, but the new-home market still has a long way to go before it's back to normal, Meritage Homes CEO Steven Hilton told CNBC's "Squawk on the Street" on Monday.
"Our business has been strong," Hilton said. "We've had very brisk traffic and sales activity across all our communities."
He also suggested that the third monthly drop in homebuilder sentiment reported by the National Association of Home Builders was inconsistent with business activity.
"I don't get those sentiment numbers, because they're not in line with what we're feeling," he said.
(Read More: US Homebuilder Confidence Declines for Third Month)
Meritage is the ninth-largest publicly traded U.S. homebuilder, with operations in the South and West, including Phoenix, Dallas, Houston and Orlando. Toll Brothers, Lennar and PulteGroup are among the other public homebuilders.
Hilton expects prices for new homes to rise an average of 9 percent this year, and steeper increases where demand is higher, such as in certain Western markets and Florida.
"Supply is very low in most of the markets we build in," Hilton said. "Demand is strong, and affordability is the highest point it's been almost ever."
While rising mortgage rates may eventually lead to a slowdown, Hilton said it would take rates backing up to 7 percent or 8 percent before he became nervous.
(Read More: Housing Recovery 'Fundamentally Strong': Lennar CEO)
Mortgage rates climbing to 5 percent would be good for business, Hilton said, as those on the fence would re-enter the market.
"We have a long way to go to get back to a normal new-home market," he added. "We're still building less than half the 30-year average in this country."
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