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Today, the National Association of Home Builders (NAHB) released its latest Housing Market Index (HMI) showing that assesments of housing activity went flat in January. The composite HMI index remained at 47, while the "buyer traffic" index improved slightly to 37, a level not seen since early 2006.

It's important to note that January has continued to show a slight pullback to future expectations, a development that is worth noting as the new-home market moves through it's most active months at the start of the year. (See Bob Tolls explanation for January -- early spring being the new home markets most active period annually.)

While all indicators have made truly spectacular improvements this year, it's important to note that conditions still remain fairly distressed by historic standards.

Although, looking at the data, it is fairly clear that the last few months of results indicate a major change in builder sentiment. This is likely coming as a result of improvements in confidence, given the notable rise in buyer traffic, reduced inventory, and a more balanced monthly supply.

Source: Homebuilder Blues - NAHB/Wells Fargo Homebuilder Ratings, January 2013