WASHINGTON (MarketWatch)—Further evidence of a two-track U.S. economy came Monday as home-builder confidence rose to a fresh decade high.

The National Association of Home Builders/Wells Fargo housing market index, a monthly survey that measures market conditions for new home sales, rose 3 points to 64 in October, its highest level since the same month of 2005. Economists polled by MarketWatch had expected a reading of 62, on a scale where any reading above 50 is considered good.

The index measuring sales expectations for the next six months rose seven points to 75, and the component gauging current sales conditions increased three points to 70. The index on buyer traffic held steady at 47, NAHB said.

The housing-market indicator, while running stronger than the hard data on housing starts, is a further sign of a two-track economy. Parts of the economy exposed to the stronger dollar and the sharp drop in energy prices are floundering, while those helped by low interest rates, like autos and housing, have been strong.

One caveat to the strong reading is the uptick in housing activity ahead of new loan disclosure rules that came into effect Oct. 3. Mortgage applications then fell sharply after the deadline, according to weekly mortgage data.

Housing starts data is due for release Tuesday.