Builder confidence in the market for newly built single-family homes fell three points to 58 in February from an upwardly revised January reading of 61 on the National Association of Home Builders/Wells Fargo Housing Market Index. 

"Though builders report the dip in confidence this month is partly attributable to the high cost and lack of availability of lots and labor, they are still positive about the housing market," said Ed Brady, NAHB chairman. "Of note, they expressed optimism that sales will pick up in the coming months."

The HMI component measuring sales expectations in the next six months rose one point to 65 in February. The index measuring current sales condition fell three points to 65 and the component charting buyer traffic dropped five points to 39.

The average for the Midwest fell one point to 57, the West registered a three-point drop to 72 and the Northeast and South each posted a two-point drop to 47 and 59, respectively. 

"Builders are reflecting consumers' concerns about recent negative economic trends," said David Crowe, NAHB chief economist. "However, the fundamentals are in place for continued growth of the housing market. Historically low mortgage rates, steady job gains, improved household formations and significant pent up demand all point to a gradual upward trend for housing in the year ahead."