NAHB housing market index fell to 55 in October from downwardly-revised 57 in September, vs consensus 57. Despite the drop in October, the index has risen 14 points from a year ago and remains near the post-recession high.
The NAHB housing market index has been a decent leading indicator of housing starts in the past. NAHB-index have been rising but the economy is still lacking New Homes sold and people getting employed in construction. Housing Starts and Mortgage Applications going in the opposite direction as NAHB-index.
Looking at history, the NAHB index has a habit of over-exuberance during rebounds. Besides business cycle considerations, prevailing mortgage rates are the biggest factors to consider when evaluating sales levels. All else being equal, as rates rise, sales will fall as consumers wait for a more opportune time to purchase a home.
More on US Housing: https://brokenmarkets.wordpress.com/2013/09/26/us-housing-3/