Home builder confidence ebbed slightly in March, but according to the National Association of Home Builders, it remains in "strong territory." NAHB's Housing Market Index (HMI), which is produced in cooperation with Wells Fargo, dipped to 70 in March, down from February's downwardly revised (from 72) level of 71.

"Builders' optimism continues to be fueled by growing consumer demand for housing and confidence in the market," said NAHB Chairman Randy Noel. "However, builders are reporting challenges in finding buildable lots, which could limit their ability to meet this demand."

NAHB conducts a monthly survey among its new home builder members which asks them their perceptions of current single-family home sales and sales expectations for the next six months as "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as "high to very high," "average" or "low to very low." Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

The HMI component gauging current sales conditions held steady at 77, the chart measuring sales expectations in the next six months dropped two points to 78, and the index regarding buyer traffic fell three points to 51.

"A strong labor market, rising incomes and a growing economy are boosting demand for homeownership even as interest rates rise," said NAHB Chief Economist Robert Dietz. "With these economic fundamentals in place, the single-family sector should continue to make gains at a gradual pace in the months ahead."

Regional scores are reported as three-month moving averages. The composite in the Northeast rose 1 point to 57 while a 1-point decrease reduced the score in the South to 73.  The moving average in the West fell two points to 79, and the Midwest dropped four points to 68.