A one-point decline in the National Association of Home Builders/Wells Fargo March Housing Market Index indicates that housing demands are returning to a sustainable pace, according to the NAHB.

"Today's HMI provides the latest evidence of a predicted and orderly cooling process for the nation's single-family, new-home market, which easily hit record highs in 2005," said NAHB President David Pressly, a home builder in Statesville, N.C.

Noting that the confidence gauge has remained within a narrow two-point range for four consecutive months following a retreat from its peak in mid-2005, NAHB chief economist David Seiders attributed March's slight downshift to eroding affordability as well as a gradual withdrawal of investor demand in some areas.

"Rising interest rates and high rates of home-price appreciation have raised the bar for homeownership to beyond what some families can reach," he said. "Meanwhile, a retreat of short-term investors from certain markets is helping restore equilibrium between supply and demand."

March's index, at 55, represented a one-point decline from February's revised 56 reading, which followed two consecutive months at 57. There was slight erosion of the index's three components in the latest report, with single-point declines in current single-family sales and prospective buyers and a two-point decline in sales expectations for the next six months. Both the current and expected sales components remained well in the positive range, at 60 and 62, respectively, according to the NAHB.