The National Association of Home Builders/Wells Fargo builder sentiment index released Tuesday rose to 41 this month, up from 40 in September. That's the highest reading since June 2006, just before the housing bubble burst.
Any reading below 50 indicates negative sentiment about the housing market. The index hasn't been above 50 since April 2006, the peak of the housing boom.
The gauge of current sales and builders' outlook on sales over the next six months remained unchanged from September's reading. But a measure of traffic by prospective buyers rose 5 points to 35, the highest level since April 2006.
The survey is based on responses from 400 builders. It has been trending higher since last October, when the reading stood at 17. The index sank to 8, its lowest point dating back to 1985, in January 2008.
Construction and sales of new homes remain at depressed levels, but have been improving this year, and the latest builder sentiment index reflects that, said Paul Ashworth, an economist at Capital Economics.
"It's another data point suggesting that housing has turned the corner," Ashworth added.
Recent housing data continue to point to signs that the housing market is making a sustained comeback.
Sales of new homes remained near a two-year high in August. And home prices rose nationwide in July compared with a year earlier, according to the Standard & Poor's/Case-Shiller index. That was the second straight year-over-year gain.
Construction of single-family homes rose in August to the fastest annual rate in more than two years.
Home sales have been boosted by ultra-low mortgage rates. A limited supply of homes for sale also has helped drive prices up.
Despite the positive strides, sales of new homes and the pace of new construction remain well short of levels considered healthy. And while many economists anticipate the turnaround will continue gaining momentum next year, the housing market isn't expected to recover fully until job growth improves and the unemployment rate, now at 7.8 percent, declines further.
Though new homes represent less than 20 percent of the housing sales 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 the NAHB's data.