Strong demand and a slim supply of affordable, existing homes for sale has the nation's homebuilders feeling better about their business.

A monthly index of builder sentiment rose 2 points in May, 1 point higher than analysts expected. The National Association of Home Builders sentiment index now stands at 70. Anything above 50 is considered positive. April's reading was revised down 1 point to 68. The index stood at 69 in May 2017.

"The solid May report shows that builders are buoyed by growing consumer demand for single-family homes," said NAHB Chairman Randy Noel, a custom homebuilder from LaPlace, Louisiana. "However, the record-high cost of lumber is hurting builders' bottom lines and making it more difficult to produce competitively priced houses for newcomers to the market."