The National Association of Home Builders this afternoon (Dec. 17) reported that its NAHB/Wells Fargo Housing Market Index (HMI) in December remained stuck at 19, its lowest point since it was created in January 1985, for the third consecutive month. An HMI reading of 50 indicates favorable conditions.

The index gauging current sales conditions for single-family homes improved by a single point from November, to 19, and the index gauging sales expectations for the next six months rose two points to 26. But the index gauging traffic of prospective buyers declined three points to 14.

Regionally, the HMI for the Midwest gained two points to 15; it also gained two points for the South, to 21. The HMI in the West was unchaged at18; in plunged seven points to 19 in the Northeast, which the NAHB attributed to "wetter weather conditions than normal in the survey period." All regions were down on a year-over-year basis.

"Builders continue to look for signs of improvement in the ongoing mortgage market crisis that is weighing on housing and the overall economy," said NAHB President Brian Catalde, a home builder from El Segundo, Calif. "Recent actions taken by Congress and the Administration addressing certain aspects of the problem are definitely a step in the right direction."

"Today's report shows that builders' views of housing market conditions haven't changed in the past several months, and there clearly are signs of stabilization in the HMI," said David Sieders, NAHB chief economist. "At this point, many builders are bracing themselves for the winter months when home buying traditionally slows, scaling down their inventories and repositioning themselves for the time when market conditions can support an upswing in building activity--most likely by the second half of 2008."

Michael Rehaut, the home building analyst at J.P. Morgan Securities, cautioned investors in a research note not to read too much into the three-month holding pattern in the HMI number. "While on the surface, a third straight month at 19 may seem like the emergence of a trough, we believe on the contrary that the survey, remaining at a highly depressed level, combined with still highly elevated inventory levels, will result in further home price declines and material impairment charges over at least the next 2-3 quarters," Rehaut wrote.

The HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as either "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as either "high to very high," "average" or "low to very low."