"Combined with the upward movement we've seen in other key housing indicators over the past six months, this report adds to the growing acknowledgement that housing ... is returning to its more traditional role of leading the economy out of recession," said National Association of Home Builders Chief Economist David Crowe in a statement.
The trade group said Tuesday that the Home Builders/Wells Fargo Housing Market Index for builder confidence added six points in July to reach 35, putting the index at its highest level since March 2007.
The gain was the highest one-month climb in a decade, the group said.
"Builder confidence increased by solid margins in every region of the country in July as views of current sales conditions, prospects for future sales and traffic of prospective buyers all improved," said Barry Rutenberg, chairman of the NAHB.
"This is greater evidence that the housing market has turned the corner," he said.