The home builder association's index of builder confidence moved up by six percentage points in September to a reading of 65, the highest it has been since last October, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released Monday. The August reading was downwardly revised to a reading of 59.

All three HMI components moved higher in September. Current sales expectations rose six points to 71 and sales expectations in the next six months increased five points to 71 as well. The index measuring traffic of prospective buyers was up four points to 48.

The three-month moving averages for HMI scores gained in three out of the four regions. The Northeast and South each registered a one-point gain to 42 and 64, respectively, while the West rose four points to 73. The Midwest was unchanged at 55.

“As household incomes rise, builders in many markets across the nation are reporting they are seeing more serious buyers, a positive sign that the housing market continues to move forward,” said NAHB Chairman Ed Brady, a home builder and developer from Bloomington, Ill. “The single-family market continues to make gradual gains and we expect this upward momentum will build throughout the remainder of the year and into 2017.”

“With the inventory of new and existing homes remaining tight, builders are confident that if they can build more homes they can sell them,” said NAHB Chief Economist Robert Dietz. “Though solid job creation and low interest rates are also fueling demand, builders continue to be hampered by supply-side constraints that include shortages of labor and lots.”

The index measures builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.