Sales of new single-family homes rose 5.4 percent in July, as more builders reported higher buyer traffic. Such traffic may lead to an increase in building activity as well, as home builders add more inventory to meet a heightened confidence in the market. The Commerce Department reported Tuesday that sales of newly built single-family homes rose to a seasonally adjusted annual rate of 507,000 units in July.

Regionally, the Northeast saw the largest gains in new-home sales, with sales rising 23.1 percent month-over-month in July to a 14-month high. New-home sales also posted a 6.7 percent gain in the West and a 5.8 percent increase in the South. The Midwest was the only region to post a decline, with sales falling nearly 7 percent month-over-month.

The stock of new homes for-sale reached 218,000 units in July – a 5.2-month supply at the current sales pace. That marks the highest inventory level since March 2010. Nevertheless, supply still remains less than half of what it was during the housing boom.

“As job growth and consumer confidence continue to strengthen, the housing market should make additional gains this year,” says David Crowe, chief economist at the National Association of Home Builders.