Homes are in strong demand according to a new CNBC report, and homebuilder’s are benefiting and feeling better about their business. A monthly index of builder sentiment rose two points in May. The National Association of Home Builders (NAHB) sentiment index now stands at 70. Anything above 50 is considered positive.

Prices for newly built homes however continue to rise with the strong demand. Builders point to higher costs for land, labor and materials, as making it too difficult to profit on low-priced homes.

“Tight housing inventory, employment gains and demographic tailwinds should continue to boost demand for newly built single-family homes,” said Robert Dietz, chief economist of the NAHB. “With these fundamentals in place, the housing market should improve at a steady, gradual pace in the months ahead.”