US homebuilder sentiment advanced in June to an 11-month high as a limited supply of existing homes continued to spark interest in new construction.

The National Association of Home Builders/Wells Fargo gauge rose five points to 55, figures showed Monday. The index, which has increased for six consecutive months, exceeded all estimates in a Bloomberg survey of economists.

“A bottom is forming for single-family home building as builder sentiment continues to gradually rise from the beginning of the year,” Robert Dietz, NAHB chief economist, said in a statement. “The Federal Reserve nearing the end of its tightening cycle is also good news for future market conditions in terms of mortgage rates and the cost of financing for builder and developer loans.”

A measure of sales expectations increased to the highest level since May of last year. Gauges of current sales and prospective buyer traffic both advanced to 11-month highs.

The report also showed a quarter of the builders surveyed said they reduced home prices to bolster sales. That share is down from a peak of 36% in November and suggests demand is gradually recovering. Some 56% of respondents offered incentives to buyers this month, up slightly from the prior month but down from 62% at the end of last year.

Builder sentiment increased in all four US regions. Index readings above 50 indicate more builders view conditions as good rather than poor.

--With assistance from Kristy Scheuble.