Homebuilder sentiment in June rose above a key milestone for the first time since April 2006, signaling a vote of confidence in the sector's recovery, according to data Monday from the National Association of Home Builders.

The NAHB/Wells Fargo Housing Market index surged to 52 from 44 in May, topping forecasts for 45. Readings higher than 50 indicate more builders view market conditions as favorable than poor. The level in June was the highest mark since March 2006.

"Surpassing this important benchmark reflects the fact that builders are seeing better market conditions as demand for new homes increases," NAHB chairman Rick Judson said in a statement. "With the low inventory of existing homes, an increasing number of buyers are gravitating toward new homes."

Confidence among homebuilders has strengthened in the last year and a half. The index is 23 points higher than where it was in June 2012. Rising prices, tighter inventory and a boost in sales all have helped the housing market improve.

Homebuilders felt even more optimistic for the coming months with the gauge of single-family sales expectations for the next six months accelerating to 61 from 52. The single-family home sales component rose to 56 from 48, while prospective buyer traffic climbed to 40 from 33.

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