The trend of recent declines in builder confidence in the market for new homes continued in January. The National Association of Home Builders reported Tuesday that its Housing Market Index declined one point to 15, its lowest reading since last June.

"Home buying conditions have rarely been as good as they are right now, but consumers are still waiting to see significant positive signs of improvement in employment and confidence, and this is slowing buyers' return to the market," said David Crowe, NAHB chief economist. "Meanwhile, competition from foreclosed homes is also severely impacting new-home sales."

Of the three component indices of the HMI, the index gauging current sales conditions and the index gauging traffic of prospective buyers each dropped a point to 15 and 12, respectively. The index gauging sales expectations in the next six months held even, at 26.

Regionally, the index was down one point in three regions, with the Northeast falling to 22, the Midwest to 11 and the South to 16. The HMI fell three points in the West, to 16.

"At this point, home builders have done everything we possibly can to set the stage for a housing recovery -- we've thinned our inventories, we've kept new construction to a minimum, and we've fought for and achieved a great new buying incentive with the extension and expansion of the home buyer tax credit," said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. "We stand poised and ready to deliver new homes as soon as our customers are ready to take advantage of the tax credit and other historically good buying conditions in terms of interest rates, selection, and prices. Yet builders also realize that factors beyond our control -- including consumer concerns about job security and competition from foreclosed homes on the market -- are still impeding demand for new homes at this time."

A somewhat contradictory report on market conditions was delivered by real estate consultant John Burns, whose January builder survey reported a pickup in sales and traffic immediately following Christmas and carrying into the new year. The survey is based on interviews with 302 home building executives.

According to John Burns Real Estate Consulting, average net sales per community held at 1.4 nationally, with gains in south Florida the Northeast and the Northwest offsetting declines in California and Texas. Moreover, for the first time since the housing dowturn began, Burns' respondents indicated stable home prices in four regions: Southern California, Texas, the Midwest and South Florida.

"Traffic improvements are more about quality than about sheer numbers," said Jody Kahn, a vp with Burns. "Still, this better end to the year buoyed builders' perspectives for the next six months."

Yet another report, this one issued by the Portland Cement Assocation, took the dimmer view. Despite recent data suggesting increased sales activity, foreclosure improvement and inventory reduction, the environment for a sustained improvement in single-family starts activity may not be as positive as it seems, the PCA said.

According to PCA, home builders are unlikely to accelerate construction activity until two critical conditions are met, including low inventory levels of unsold new homes and stable or rising home prices.

"Currently, with housing prices fluctuating and new foreclosures coming on the market every month, home builders have no guarantee of a adequate return on investment," Ed Sullivan, PCA chief economist said. "And there is little to suggest that this will change in the near future."