Catherine Nesset's Real Estate News

An index that gauges builder confidence for single-family homes jumped two points in May, to its highest level since September 2008, according to the National Association of Home Builders.

The May gain in the Wells Fargo-NAHB Housing Market Index followed a five-point rise in April.

The index is based on a survey of builders, who rate current single-family home sales and sales expectations for the next six months as "good," "fair" or "poor." They also rate traffic by prospective buyers to new homes.

Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good.

Two out of three components of the index rose in May. The index component gauging current sales conditions rose two points to 14, while the component gauging sales expectations for the next six months rose three points to 27. The index gauging traffic of prospective buyers remained steady, at 13.

NAHB Chairman Joe Robson, a homebuilder from Tulsa, Okla., in a statement added that affordable prices, a large inventory of for-sale homes and an $8,000 tax credit for first-time buyers provide "a very appealing set of reasons to make a move."

--Riya V. Anandwala