Homebuilder confidence shot up over November, revisiting a high previously seen in May 2010, according to a recent index.

The National Association of Home Builders (NAHB) released a monthly housing market index in association with Wells Fargo that tracks homebuilder sentiment about the market by quantifying it on a 100-point index.

The index found a three-point lead on 17 from October, boosting homebuilder confidence in the single-family home market to 20 points, last seen more than a year ago.

The surge in confidence nevertheless remains 30 points below from an average score, which hovers around 50 points for the trade group. Anything below 50 signals weak confidence for homebuilders.

“While this second solid monthly gain on the builder confidence scale is encouraging, the overall measure remains quite low due to the many challenges that home building continues to face with regard to the high number of foreclosures, the difficulties of obtaining construction financing and accurate appraisals, and the restrictive lending environment that is discouraging potential

buyers,” NAHB Chairman Bob Nielsen said in a statement.

“These problems must be addressed so that housing can contribute to economic and job growth the way it has in the past,” he added.

Despite all-time highs for affordability, homeowners remain largely on the sidelines of the housing market.

Mortgage rates remain extremely low, with Freddie Mac reporting a plunge by the benchmark 30-year fixed-rate mortgage to 3.99 percent last week – the second-lowest on record.

“This second consecutive gain in the HMI is evidence that well-qualified buyers in select areas are being tempted back into the market by today’s extremely favorable mortgage rates and prices,” NAHB Chief Economist David Crowe added. “We are anticipating further, gradual gains in the builder confidence gauge heading into 2012 due to these pockets of improving conditions that are slowly spreading.”

The NAHB index also measured homebuilder sentiment in the current sales environment, which it said hit 20 points, alongside a component that found future sales expectations 15 points. Both of these likewise hit their highest points since May 2010.

In other news related to the trade group, Nielsen released a separate statement earlier Wednesday that called for a restoration of higher limits for conforming loans, just as a stopgap spending measure in the House would again up the threshold for loans backed by the Federal Housing Administration (FHA).

He called the FHA – recently under a cloud of uncertainty for a dearth of capital reserves unable to meet a minimum 2-percent federal requirement – “fully self-supporting, and a great example of a public-private partnership with lending institutions.”