The National Association of Home Builders/Wells Fargo Housing Market Index dropped five points to 17 during the month after a two consecutive months of gains. The monthly survey that NAHB has been conducting for more than 20 years gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.”

A score below 50 indicated that more builders view conditions as poor than good.

The HMI’s three component indexes dropped in June. Current sales conditions declined five points to 17, sales expectations for the next six months fell four points to 23 and the one gauging traffic of prospective buyers fell two points to 14.

Regionally, the HMI also posted losses in all regions in June. The Northeast, fell 17 points to 18 following a 14-point jump in May. The Midwest recorded a three-point drop to 14, while the South posted a three-point fall to 19 and the West registered a four point decline to 15 from a revised May level of 19.

The home buyer tax credit did its job in stoking spring sales and we expected a temporary pull back in the builders' outlook after the credit expired at the end of April," said NAHB Chairman Bob Jones in a statement.

"Builders remain very cautious," said NAHB Chief Economist David Crowe. However, Crowe said, "an improving economy, rising employment, low mortgage rates and stabilizing home values should help the housing market move forward."