Assurance in the single-family home market among members of the National Association of Home Builders is increasing, according to the group’s new survey.

The NAHB/Wells Fargo Housing Market Index for October rose four points to 18. It is the biggest one-month gain since federal tax credits spurred the market in April 2010.

"Builder confidence regained some ground in October due to modest improvements in buyer interest in select markets where economic recovery is starting to take hold and where foreclosure activity has remained comparatively subdued," said NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. "That said, confidence remains quite low as builders continue to confront overly restrictive lending policies that are discouraging prospective buyers, problems with new-home appraisals and widespread uncertainty regarding federal support for home ownership."

The association’s chief economist, David Crowe, said the results may signal a small recovery is under way.

"This latest boost in builder confidence is a good sign that some pockets of recovery are starting to emerge across the country as extremely favorable interest rates and prices catch consumers' attention," Crowe said. "However, it's worth noting that while some builders have shifted their assessment of market conditions from 'poor' to 'fair,' relatively few have shifted their assessments from 'fair' to 'good.' One reason is that builders are facing downward pricing pressures from foreclosed homes at the same time that building materials costs are rising, and this is further squeezing already tight margins."

Under the survey, builders are asked to rate their perceptions of current single-family home sales and expectations for the next six months as "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as "high to very high," "average" or "low to very low." Scores are used to calculate a seasonally adjusted index.

Any number above 50 signals that more builders see the market as good rather than poor.