Two reports that contribute to the picture of the housing industry were released on Monday. After news from the subprime mortgage market, the quarterly delinquency report, and the accompanying reaction of the stock market the two most recent pieces of information were pretty much non-events and the stock market reacted enthusiastically.

The National Association of Home Builders and Wells Fargo released their Housing Market Index (HMI) which measures the state of builder confidence in the construction market along several parameters; their perceptions of the current state of the market in terms of sales; their measure of buyer traffic at present, and their predictions for the market over the next six months. The HMI has been hammered in recent months, dropping to 39 (anything less than 50 on the index as a whole or any of its three component parts is considered negative) on revised figures for February which was originally given a score of 40. This month the overall index dropped another three points to 36. This is not terrific news, but is still up from the low of 30 the HMI hit in September.

The three component indexes also declined in March after going up in February. Current single-family home sales and sales expectations over the next three months each declined three points to 37 and 50 compared to February's revised numbers and the index measuring current buyer traffic was down one point to 28.

NAHB Chief Economist David Seiders said, "Builders are uncertain about the consequences of tightening mortgage lending standards for their home sales down the line, and some are already seeing effects of the subprime shakeout on current sales activity. The fundamentals of today's housing market still are relatively strong, including a favorable interest-rate structure, solid growth in employment and household income, lower energy prices and improving affordability in much of the single-family market - due in part to price cuts and non-price sales incentives offered by builders. NAHB continues to forecast modest improvements in home sales during the balance of 2007, although the problems in the mortgage market increase the degree of uncertainty surrounding our baseline (i.e., most probable) forecast."

The second report, the official one coming out of the U.S. Census Department in conjunction with the Department of Housing and Urban Development, is the February count of new home construction including permits issued and homes started. The two were a mixed bag. Permits were issued in February for privately-owned housing units at a rate that was 2.5 percent below the revised rate for January; the annualized estimate is now 1,532,000 and 28.6 percent lower than the number of permits estimated in February 2006. However, this number is on a par with permits issued since September, 2006 after the figures for the previous six months took a precipitous drive from 2,1470,000 to 1,727. In other words, its not 2005 but it's not a disaster either.

Housing starts totaled 1,525,000 units, up 9 percent from revised January figures but still 28.5 percent below figures for February 2006. Single family housing starts fared even better, rising 10.3 percent above January numbers.

The figures from both studies indicate that the housing market is shaky but not plummeting to the bottom. We will, hopefully, see nothing worse than a few more months of data that goes up and down.