The National Association of Homebuilders (NAHB) announced on Monday its housing market index (HMI) jumped five points to 76 in December from an upwardly revised November reading of 71 (originally 70).  That represented the highest reading since June of 1999.

Economists had forecast the HMI to stay at 70.

A reading over 50 indicates more builders view conditions as good than poor. 

All three HMI components registered gains this month. The indicator gauging current sales conditions surged seven points to 84, while the component measuring traffic of prospective buyers increased four points to 58 and the measure charting sales expectations in the next six months rose one point to 79.

NAHB Chairman Greg Ugalde noted: “Builders are continuing to see the housing rebound that began in the spring, supported by a low supply of existing homes, low mortgage rates and a strong labor market.”

Meanwhile, NAHB Chief Economist Robert Dietz said: “While we are seeing near-term positive market conditions with a 50-year low for the unemployment rate and increased wage growth, we are still underbuilding due to supply-side constraints like labor and land availability. Higher development costs are hurting affordability and dampening more robust construction growth.”