The National Association of Home Builders said the Home Builders/Wells Fargo Housing Market Index for builder confidence added two points to reach 47, climbing from a slightly revised November reading, which put the index at its highest level since April 2006.
"Builders across the country are reporting some of the best sales conditions they've seen in more than five years, with more serious buyers coming forward and a shrinking number of vacant and foreclosed properties on the market," said NAHB Chairman Barry Rutenberg in a statement.
Rutenberg added that, "today's overly stringent lending standards," were keeping some buyers from participating.
The NAHB/Wells Fargo Housing Market Index is based on a monthly NAHB survey measuring builder perceptions of current single-family home sales and sales expectations for the next six months.
The general index is made up of three component indexes and two of the three are now above the "critical midpoint of 50," the trade group said.
The index measuring current sales rose two points to 51 in December, while the index measuring expectations six months down the road lost one point to reach 51.
The index that gauges customer traffic has a ways to go to reach 50. In December, that index rose one point to reach 36, the NAHB said.