The NAHB/Wells Fargo housing market index for January is 35 after 31 in December. The reading is above the consensus of 31 in an Econoday survey and breaks a string of 12 consecutive monthly declines. Although the index remains what the NAHB said is"bearish", the gain is a positive sign for the upcoming spring home buying season. Recent declines in mortgage interest rates and concessions on the part of new home builders have improved home affordability. Potential homebuyers are entering the market as a result.

The index for present sales is up 4 points to 40 in January, pointing to a moderate uptick for new single-family home sales. The index for expected sales is less positive with a rise of 2 points to 37 which suggests homebuilders see little forward momentum for sales, although it is the best in the last four months. Buyer traffic is up 3 points to 23 in January, yet traffic remains sluggish and perhaps confined mainly to those able to prequalify for a mortgage.

The housing market index missed Econoday's consensus every month in 2022. December's 31 was 3 points short of the consensus; January's consensus is no change at 31.

The housing market index is a monthly composite that tracks home builder assessments of present and future sales as well as buyer traffic. The index is a weighted average of separate diffusion indexes: present sales of new homes, sales of new homes expected in the next six months, and traffic of prospective buyers of new homes.

This report provides a gauge of not only the demand for housing, but the economic momentum. People have to be feeling pretty comfortable and confident in their own financial position to buy a house. Furthermore, this narrow piece of data has a powerful multiplier effect through the economy, and therefore across the markets and your investments. By tracking economic data such as the housing market index, investors can gain specific investment ideas as well as broad guidance for managing a portfolio. Whether the housing market index reflects new home sales or home resales, once a home is sold, it generates revenues for the realtor and the builder. It brings a myriad of consumption opportunities for the buyer. Refrigerators, washers, dryers and furniture are just a few items home buyers might purchase. The economic"ripple effect" can be substantial especially when you think a hundred thousand new households around the country are doing this every month. Since the economic backdrop is the most pervasive influence on financial markets, home sales have a direct bearing on stocks, bonds and commodities. In a more specific sense, trends in the existing home sales data carry valuable clues for the stocks of home builders, mortgage lenders and home furnishings companies.