The National Association of Homebuilders (NAHB) announced on Tuesday its housing market index (HMI) fell two points to 72 in March from an unrevised February reading of 74.

Economists had forecast the HMI to drop to 73.

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

All three HMI components registered declines this month. The indicator gauging current sales conditions decreased two points to 79 in March, while the component measuring traffic of prospective buyers fell one point to 56 and the measure charting sales expectations dropped four points to 75.

NAHB Chairman Dean Mon noted: "Builder confidence remains solid, although sales expectations for the next six months dropped four points on economic uncertainty stemming from the coronavirus. Interest rates remain low, and a lack of inventory creates market opportunities for single-family builders."

Meanwhile, NAHB Chief Economist Robert Dietz said: "It is important to note that half of the builder responses in the March HMI were collected prior to March 4, so the recent stock market declines and the rising economic impact of the coronavirus will be reflected more in next month's report."