The National Association of Home Builders/Wells Fargo Housing Market Index crept up by one point--to 9--in February as a three point increase to 13 in the index gauging builder perception of traffic and a one point gain in current sales conditions to 7 gave the overall index a nudge. The index gauging sales expectations for the next six months, however, dropped to points to a new record low of 15.

"Home builders are especially concerned about the continually rising number of foreclosures and short sales, which are flooding the market with excess inventory and undermining overall home values," said NAHB chief economist David Crowe in releasing the index early Tuesday afternoon. "This is one reason that home builder expectations for the next six months declined in the February HMI even though traffic of prospective buyers has improved somewhat and present sales conditions were basically unchanged."

Regionally, the HMI rose one point to 12 in the South and to 5 in the West, gained two points in the Midwest to 8, and dropped a point in the Northeast to 9.

The NAHB's Crowe as well as well as Joe Robson, the Tulsa home builder who is the group's current chairman, both expressed hope that the $8,000 first-time home buyer tax credit as well as a temporary increase in FHA loan limits for high-cost areas that are included in the federal stimulus bill would help improve conditions in the housing market. Referring to an announcement by President Obama of a plan to mitigate the housing crash, which was scheduled for Wednesday, Crowe also said the NAHB "looking forward to working with the Treasury Department as details of its plan to address the urgent foreclosure problem emerge."

The index is based on a scale from 0 to 100 in which a score of 50 is the breakpoint between a positive or negative builder sentiment. The January reading of 8 was its lowest level ever.

Commenting in a research note on the HMI, John Burn Real Estate Consulting said its data mirrored the the NAHB's regarding the slight increase in traffic, particularly in Texas. However, Burns cautioned, "We caution overreacting because new home prices are still trending down everywhere, including Texas. We look forward to calling a bottom in home price declines, but we are definitely not there--in any region of the country."