U.S. homebuilders are feeling more optimistic about their sales prospects, reflecting a pickup in demand and positive expectations about further growth the rest of this year.

The National Association of Home Builders/Wells Fargo builder sentiment index released Tuesday rose to 68 this month. That's up four points from a reading of 64 in July and the highest level since May.

Readings above 50 indicate more builders view sales conditions as good rather than poor. The index has been above 60 since September.

The August index beat analyst predictions, which called for a reading of 64, according to FactSet.

Readings gauging builders' view of sales now and over the next six months also rose from last month. A measure of traffic by prospective buyers also increased.