Builders, comforted by the recent federal takeover of Fannie Mae and Freddie Mac and buoyed by improved sales trends, expressed guarded optimism about the housing market in September. As measured by the National Association of Home Builders/Wells Fargo Housing Market Index, builder confidence jumped two points in September to a reading of 18.

The HMI, released this afternoon, represented a bright economic spot in a week otherwise dominated by dark economic news and growing concern about the financial markets.

"Builders have several reasons to be more optimistic at this time," said NAHB President Sandy Dunn, a West Virginia home builder. "Many are sensing that home sales are nearing a turning point with the support of the newly enacted first-time home buyer tax credit. Meanwhile, with the government's explicit backing of Fannie Mae and Freddie Mac now assured, this should help keep mortgage rates at very favorable levels going forward."

Builders sounded particularly hopeful regarding their sales expectations for the next six months. This component of the index soared six points to a reading of 30. But they also noted slight improvements in buyer traffic (up one point, to a 14 reading) and current sales conditions (up one point, to 17).

Despite the gains, though, the overall HMI and its components do remain weak; a reading of more than 50 means that more builders consider the housing market "good." With the September HMI at 18, it does indicate that the vast majority of home builders see the sales conditions for single-family homes as poor. 

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