Homebuilder confidence rose for the fourth consecutive month in December amid strong consumer demand, tight inventories and rising home prices.

The National Association of Home Builders / Wells Fargo Housing Confidence Index rose to 84 in December from 83 in November. This corresponds to the highest level of the year, set in February.

Existing home sales rose 0.8% in October from September to a seasonally adjusted annual rate of 6.34 million, the National Association of Realtors reported last month.

And the S&P CoreLogic Case-Shiller National Home Price Index was up 19.5% in September from a year ago.

But the picture is not entirely rosy for home builders.

“While demand remains strong, finding workers, forecasting prices and dealing with material delays remains a challenge,” NAHB President Chuck Fowke said in a statement.

“Policy makers need to work on improving the supply chain and controlling costly inflation. Addressing timber prices would be a good place to start.

As for inflation, consumer prices climbed 6.8% in the 12 months to November, the largest increase in 39 years.

But “the most pressing problem for the housing sector remains the lack of stocks,” said Robert Dietz, chief economist of the NAHB.

The US inventory of active real estate listings fell 26% in the 12 months to November, compared to last year, according to Realtor.com.

The total inventory of unsold homes, including pending listings, slipped 16%.

“Construction has increased, but the industry is facing constraints, namely the cost / availability of materials, labor and land,” Dietz said.

Meanwhile, mortgage refinancing applications fell 41% last week from a year earlier as higher interest rates held home homeowners to act, the Mortgage Bankers Association said on Friday.