The National Association of Homebuilders (NAHB) announced on Tuesday its housing market index (HMI) edged down one point to 74 in February from an unrevised January reading of 75. The last three monthly readings mark the highest sentiment levels since December 2017.

Economists had forecast the HMI to stay at 75.

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

All three HMI components registered a one-point decline this month. The indicator gauging current sales conditions decreased to 80 from 81 in January, while the component measuring traffic of prospective buyers fell to 57 from 58 and the measure charting sales expectations dropped to 79 from 80.

NAHB Chairman Dean Mon noted: "Steady job growth, rising wages and low interest rates are fueling demand but builders are still grappling with increasing construction and development costs".

Meanwhile, NAHB Chief Economist Robert Dietz said: "At a time when demand is on the rise, regulatory constraints along with a shortage of construction workers and a dearth of lots are hindering the production of affordable housing in local communities across the nation. And while lower mortgage rates have improved housing affordability in recent months, accelerating price growth due to limited inventory may offset some of that effect."