Home builders found the housing market slightly more hospitable in February, according to results of the Wells Fargo/NAHB housing market index (HMI) released Tuesday.

The monthly survey reported a two-point increase in the overall index, which rose to a reading of 17.

“Continued low interest rates, very attractive home prices that appear to have stabilized in many markets, and the availability of the home buyer tax credit make this an opportune time for potential purchasers,” said NAHB Chairman Bob Jones, a home builder from Bloomfield Hills, Mich. “As a result, builders are slightly more optimistic that the housing recovery is finally beginning to take root.”

Buyers must sign a contract by April 30 and settle on their home, whether it’s new or existing, by June 30 to take advantage of the credit.

The HMI is composed of three components: current single-family sales, buyer traffic, and sales expectations for the next six months.  While traffic remained flat with a reading of 12, both current sales (up two points) and future sales (up one point) showed small gains.

For better or worse, though, February’s HMI offers little indication of how the year will progress for builders, according to UBS analyst David I. Goldberg. “We expect volatility in the index through the selling season as the buyer credit impacts trends,” he said.

The housing market—and by extension, the HMI—should stabilize in the second half of 2010 as the employment picture improves, he said.

Alison Rice is senior editor, online, at BUILDER magazine.