The iShares US Home Construction (NYSEArca: ITB) staged a dramatic intraday reversal Thursday following a report that industry confidence rose to its highest levels in nearly eight years.

ITB opened sharply lower Thursday but clawed back into positive territory after a report showing the National Association of Home Builders/Wells Fargo Housing Market Index rose three points to 59 in August.

“Builders are seeing more motivated buyers walk through their doors than they have in quite some time,” said NAHB Chairman Rick Judson. “What’s more, firming home prices and thinning inventories of homes for sale are contributing to an increased sense of urgency among those who are in the market.”

Still, rising mortgage rates are a question mark for the housing market and homebuilder stocks. The average rate on a 30-year fixed-rate mortgage stands at 4.4%. The 30-year fixed rate hit an all-time low of 3.31% last November, according to the LA Times.

“Builder confidence continues to strengthen along with rising demand for a limited supply of new and existing homes in most local markets,” said NAHB Chief Economist David Crowe. “However, this positive momentum is being slowed by the ongoing headwinds of tight credit and low supplies of finished lots and labor.”

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