"February's HMI recovered the ground it lost in January, though the reading is still below what it was throughout much of 2000," said Bruce Smith, NAHB president. "Home builders see recent declines in interest rates on home mortgages as a positive factor helping to offset weakness in some parts of the economy."
The HMI is derived from a monthly builders survey that NAHB has been conducting for nearly 20 years. Home builders are asked to rate current sales of single-family homes and sales expectations for the next six months as "good," "fair" or "poor." They are also asked to rate traffic of prospective buyers as either "high to very high," "average" or "low to very low." Scores for responses to each component are used to calculate a seasonally adjusted overall index, where any number over 50 indicates that more builders view sales conditions as good than poor.
Each of the three component indexes rebounded in February. The index for current sales of new single-family homes rose two points to 62, while the index for expected sales in the next six months rose six points to 67. The index gauging traffic of prospective buyers rose five points to 45.