The mood of U.S. home builders shot up last month, according to the latest figures released by Wells Fargo and the NAHB. 

Builder confidence in the single-family home market rose six points to 57 on the July National Association of Home Builders/Wells Fargo Housing Market Index.

This is the third straight month of increases for the index, and its strongest number since January 2006.

"Today's report is particularly encouraging in that it shows improvement in builder confidence across every region as well as solid gains in current sales conditions, traffic of prospective buyers and sales expectations for the next six months," said NAHB Chairman Rick Judson, a home builder from Charlotte, N.C.

The survey is compiled by asking builders their perceptions of current and future market conditions. A number over 50 says most builders consider conditions to be “good” rather than “poor.”

"Builders are seeing more motivated buyers coming through their doors as the inventory of existing homes for sale continues to tighten," said David Crowe, the association’s chief economist. "Meanwhile, as the infrastructure that supplies home building returns, some previously skyrocketing building material costs have begun to soften."