With the housing legislation passed, home builders' assessment of the housing market appears to have stabilized at an overall reading of 16, according to the NAHB/Wells-Fargo Housing Market Index (HMI) released today.

This level represents the same level of optimism—or pessimism, depending on the perspective—as builders expressed in the July HMI, whose 16 reading was the lowest ever since the index began in 1985.

After all, traffic remained extraordinarily weak in August, with a reading of 12 on a 100-point scale, according to the three-part HMI. Single-family sales also stayed low, increasing by only one point to 16. Only builders' sales expectations for the next six months stayed out of the teens; with a reading of 25, this August component increased two points compared to July.

"While our overall measure of builder confidence remains at a record low at this time, it is a good sign that two out of three of the HMI's component indexes rose in August, and this may be an indication that we are nearing the bottom of the long downswing in new-home sales," said David Seiders, NAHB's chief economist. "Our current forecast shows stabilization of sales during the second half of this year, followed by solid recovery in 2009 and beyond."

Other industry watchers didn't sound so sanguine. "This weakness [in the HMI] reflects our belief that conditions remain bleak and that any improvement is unlikely to materialize until [the second half of 2009] at the earliest," said David I. Goldberg, a home building analyst with UBS Investment Bank in New York. "In the meantime, we expect rising foreclosures and declining mortgage liquidity to continue to negatively impact buyers, leading to further home price erosion. In turn, builder sentiment will likely remain pessimistic until these pressures begin to ease."

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