Optimism the market for new, single-family homes was up for the fourth straight month in January, according to a report from the National Association of Home Builders.

The NAHB-Wells Fargo Housing Market Index rose four points to 25 - its highest level since June 2007.

"Builder confidence has now risen four months in a row, with the latest uptick being universally represented across every index component and region," said Bob Nielsen, chairman of the NAHB and a home builder from Reno, Nev. "This good news comes on the heels of several months of gains in single-family housing starts and sales, and is yet another indication of the gradual but steady improvement that is beginning to take hold in an increasing number of housing markets nationwide - and that has been shown by our improving markets index. Policymakers must now take every precaution to avoid derailing this nascent recovery."

The index is made up of the results from a survey the NAHB has been conducting for 20 years. It measures perceptions of the current market and expectations for the next six months, asking participants to rate conditions "good," "fair" or "poor.” Builders are also asked to rate prospective buyer traffic as "high to very high," "average" or "low to very low."

Averaged into a seasonally adjusted index, a number over 50 indicates a majority view economic conditions as positive.

"Builders are seeing greater interest among potential buyers as employment and consumer confidence slowly improve in a growing number of markets, and this has helped to move the confidence gauge up from near-historic lows in the first half of 2011," said NAHB chief economist David Crowe. "That said, caution remains the word of the day as many builders continue to voice concerns about potential clients being unable to qualify for an affordable mortgage, appraisals coming through below construction cost, and the continuing flow of foreclosed properties hitting the market."