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The National Association of Home Builders (NAHB)/Wells Fargo housing market index (HMI) for January dipped to 72, down two points from an 18-year high of 74 in December. Economists polled by Bloomberg were expecting an index reading of 73.

An index reading above 50 indicates that more builders view sales conditions as good than view them as poor. NAHB chairman Granger MacDonald said that builders remain optimistic that “changes to the tax code will promote the small business sector and boost broader economic growth.”

The current sales conditions sub-index for January dipped from 80 to 79, and the sub-index that estimates prospective buyer traffic fell from 58 to 54. The sub-index measuring sales expectations for the next six months slipped by a point to 78.

NAHB’s chief economist, Robert Dietz, said:

The HMI gauge of future sales expectations has remained in the 70s, a sign that housing demand should continue to grow in 2018. As the overall economy strengthens, owner-occupied household formation increases and the supply of existing home inventory tightens, we can expect the single-family housing market to make further gains this year.

In the NAHB’s regions, three-month moving average indexes rose in all four regions. In the Northeast, the index rose five points to 59. the Midwest saw a one-point increase to 70, and the index also rose one point in the South to 73. The West posted a gain of two points to 81.

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