U.S. homebuilder sentiment surged in July to notch its biggest jump in nearly a decade in a fresh sign the housing market has turned a corner, the National Association of Home Builders said on Tuesday.

The NAHB/Wells Fargo Housing Market index climbed to 35 from M29 in June, making for the biggest gain since September 2002. The index handily beat economists' expectations for 30.

It was the highest level since March 2007 when sentiment was still tumbling as homebuilders reeled from the housing market's collapse.

The index has more than doubled since July of last year when it was at 15 but it is still well off the 50 mark that shows more builders view market conditions as favorable than poor. The index has not been above 50 since April 2006.

Recent data has suggested the beaten down housing sector is stabilizing, even as growth in other parts of the economy slows.

"This report adds to the growing acknowledgement that housing — though still in a fragile stage of recovery — is returning to its more traditional role of leading the economy out of recession," NAHB chief economist David Crowe said in the statement.

"This is particularly encouraging at a time when other parts of the economy have begun to show softness, and is all the more reason that the challenges constraining housing's recovery — namely overly tight lending conditions, poor appraisals and the flow of distressed properties onto the market — need to be resolved."

The single-family home sales component rose to its highest level since February 2007 at 37 from 31. The gauge of single-family sales expectations for the next six months ran up to 44 from 33, while prospective buyer traffic climbed to 29 from 23.