WASHINGTON, DC—Builder confidence in the market for newly-constructed single-family homes has hit an 18-year high, the National Association of Home Builders said Monday. That's based on a five-point increase in the NAHB/Wells Fargo Housing Market Index to 74, marking the highest level in the index since July 1999.

All three components of the HMI saw gains in December. The component measuring buyer traffic jumped eight points to 58, the index gauging current sales conditions rose four points to 81 and the index for sales expectations in the next six months increased three points to 79.

“The HMI measure of home buyer traffic rose eight points, showing that demand for housing is on the rise,” says Robert Dietz, chief economist with NAHB. “With low unemployment rates, favorable demographics and a tight supply of existing home inventory, we can expect continued upward movement of the single-family construction sector next year.”