The home-building sector's confidence posted its biggest gain in five years, an unexpected showing providing hope to a sector fighting for survival.

Such optimism helped fuel Wednesday's sector gains. Standard Pacific Corp. (SPF) soared 32.5% to $1.59 a share, while Hovnanian Enterprises Inc. (HOV) saw a gain of 14.4% to $2.14 a share. The Dow Jones U.S. Home Construction Index added 4.9%, with none of the major public builders recently in negative territory.

According to the latest National Association of Home Builders/Wells Fargo Housing Market Index, builder confidence for new single-family homes climbed 5 points in April to 14 out of 100, the largest one-month increase since May 2003. It was its first time out of single-digit territory in six months.

That's compared with a high of 78 in December 1998. Still, Washington-based NAHB cheered the gains, saying they suggest the market is at or near bottom. Several reports have recently said buyer traffic is up, fueled by falling prices, the lowest interest rates in years and the government's first-time buyer tax credit.

"This is a very encouraging sign that we are at or near the bottom of the current housing depression," said NAHB Chief Economist David Crowe in a statement.

The release follows a Wachovia note saying it expects the news flow related to new home-sales activity to be positive over the next four to six weeks.

Not everyone is convinced of a turnaround. Mounting foreclosure sales persist as stubborn, bargain-priced competition. Meanwhile, job losses continue, leaving many afraid to buy a home.

"Some investors think we could be getting closer to a bottom or the light at the end of the tunnel. You need to see some sustaining information to be able to make that call," Bob Curran, lead home-building analyst with credit rating agency Fitch Ratings. "Is it enough to suggest that a bottom has been reached? I'm not sure there is enough of that evidence."

UBS, which pointed out the results were above its own and consensus estimates of 10, agreed.

"While conditions are certainly showing signs of improvement, much of this is attributable to normal seasonal trends," UBS analyst David Goldberg wrote. "We continue to expect that a trough in housing won't materialize until supply growth slows and demand picks up further."

Still, the NAHB said every index component saw a boost. The largest gain came from sales expectations in the next six months, which surged 10 points to 25. Current sales conditions and prospective buyer traffic each added 5 points, to 13 and 14, respectively. The index rose in every geographic region in April.

The closely watched survey, which has been conducted for more than two decades, gauges builder perceptions of current single-family home sales and sales expectations for the next six months. Any number over 50 indicates more builders view conditions as good, rather than poor.

-By Dawn Wotapka, Dow Jones Newswires; 201-938-5248; dawn.wotapka@dowjones.com