Builder confidence rose for the third consecutive month in December, improving two points from November’s downwardly revised number to a reading of 21, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). The index, which tracks builder sentiment about the market for new, single-family homes, has registered a reading of more than 20 only once since its numbers fell precipitously in 2007.

Of the index’s three components, the largest jump came from the gauge of prospective-buyer traffic, which was up three points for a reading of 18. The component measuring current sales conditions was up two points to 22, and the component gauging sales expectations in the next six months was up one point to 26.

While noting that builders continue to face headwinds from foreclosures, concerns about job security, and the difficulty of off-loading existing homes, David Crowe, chief economist at the NAHB, reported that builders are experiencing a palpable bump. "Builders are reporting more inquiries and more interest among potential buyers than they have seen in previous months," he said in a statement regarding the numbers today.

Economists at Ticonderoga Securities noted the same trend. "Recent builder commentary suggests less-than-normal seasonal slowing in December," wrote analysts Stephen East and Truman Patterson in a release today.

Hard data have also been reinforcing the better mood. Permit numbers from the Census Bureau showed that in October, the first in the three-month series of HMI improvements, the leading indicator was up 10.9%. In November, permits moved up another 5.7% from October's level.

Overall, levels for both the HMI and permits remain low. Even with October’s pickup, permits are on pace to set a record low this year. And it would require an HMI level of more than 50 to indicate that a majority of builders see conditions as good rather than poor.

On a regional basis, the South saw the largest gain in December, with a four-point improvement for a reading of 25. The West gained one point, coming in at a reading of 16. The Midwest was unchanged at 24, and the Northeast declined one point to a reading of 15.

Claire Easley is a senior editor at Builder.

Learn more about markets featured in this article: Greenville, SC.