The National Association of Home Builders (NAHB)/Wells Fargo housing market index for January slipped one point to 56 from a revised reading of 57 in November. The reading was lower than a forecast of 58 from economists polled by Reuters. An index reading above 50 indicates that more builders view sales conditions as good than view them as poor.

The current sales conditions sub-index ticked down one point in January to 62, and the sales expectations sub-index came in at 60, a drop of two points month-over-month. The sub-index that estimates prospective buyer traffic fell three points to come in at 40.

The chairman of the NAHB said:

Following an unexpected jump last month, builder confidence has essentially leveled out and is holding at a solid level. Many markets continue to improve and this bodes well for future home sales.

The NAHB’s chief economist noted:

Rising home prices, historically low mortgage rates and significant pent-up demand will drive a continuing, gradual recovery in the year ahead. However, the pace of the recovery could be stronger were it not for rising construction costs and inaccurate appraisals that are keeping some home sales from going through.

Among homebuilder stocks Thursday morning, Meritage Homes Corp. (NYSE: MTH) was off the most, down about 2.0% at $44.46 in a 52-week range of $38.42 to $52.95.

TRI Pointe Homes Inc. (NYSE: TPH) was the biggest gainer Tuesday, up about 0.6% in morning trading at $17.50, in a post-IPO range of $13.43 to $21.25.

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