The National Association of Home Builders/Wells Fargo Housing Market Index, which gauges monthly builder sentiment, fell one point to 67 in July, still two points above its year-ago level.

The NAHB/Wells Fargo HMI is derived from a monthly survey of builders that NAHB has been conducting for nearly 20 years. Home builders are asked to rate current sales of single-family homes as “good,” “fair” or “poor.” They are also asked to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for responses to each component are used to calculate a seasonally adjusted index, where any number over 50 indicates that more builders view sales conditions as good than poor.

“Home sales continue to run hot this summer, and most builders don’t see a slowdown on the horizon,” said NAHB President Bobby Rayburn, a home and apartment builder from Jackson, Miss.

The only significant decline registered in the HMI this time around was in the component index gauging traffic of prospective buyers, which fell three points from an above-average level in June. Meanwhile, the component gauging present single-family home sales remained unchanged at a solid 73 – still well above its 69 level a year ago – and the component gauging builder sales expectations for the next six months declined a point to 73.

“Long-term mortgage rates subsided back to around 6 percent during the HMI survey period, and this likely contributed to builders’ optimism,” explained NAHB Chief Economist David Seiders. “Beyond that, the continuing robust rate of home-price appreciation, high level of new household formations and perceptions of an improving economy are also helping drive the market.”

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