The National Association of Homebuilders (NAHB) announced on Thursday its housing market index (HMI) edged down one point to 75 in January 2020 from an unrevised December 2019 reading of 76.

Economists had forecast the HMI to drop to 75.

A reading over 50 indicates more builders view conditions as good than poor.

The three HMI components were mixed this month.

The indicator gauging current sales conditions decreased three points to 81, while the component measuring traffic of prospective buyers increased one point to 58 (the highest level since December 2017), and the measure charting sales expectations in the next six months held steady at 79.

NAHB Chairman Greg Ugalde noted: "Low interest rates and a healthy labor market combined with a need for additional inventory is setting the stage for further home building gains in 2020".

Meanwhile, NAHB Chief Economist Robert Dietz said: "With the Federal Reserve on pause and attractive mortgage rates, the steady rise in single-family construction that began last spring will continue into 2020. However, builders continue to grapple with a shortage of lots and labor while buyers are frustrated by a lack of inventory, particularly among starter homes."