In case you are unfamiliar with the NAHB-Wells Fargo Housing Market Index -- the latest installment of which being released today --  you can find a very nice description at the National Association of Homebuilders website.  A few highlights:

The Housing Market Index (HMI) is based on a monthly survey of NAHB members designed to take the pulse of the housing industry, especially the single-family industry.  The survey asks respondents to rate general economic and housing market conditions.

    • The HMI is a weighted average of separate diffusion indices, calculated for three key single family series in the survey: Present Sales of New Homes, Sale of New Homes Expected in the Next 6 Months and Traffic of Prospective Buyers in New Homes...
    • This formula puts each diffusion index on a convenient scale.  If all respondents answer “Good/High” then the index is 100.  If all respondents answer “Poor/Low” then the index is 0.  If equal numbers of respondents answer “Good/High” and “Poor/Low” then the index is 50.

If, like me, you live in the Midwest, your neighborhood breached the 50 threshold in the middle of 2005.  The country as a whole followed suit, but not until May of this year:

   

Nahb_housingindex

   

Note that the index values for both the Midwest and Northeast, having entered below-50 territory before the South and West, are actually improving (the East region for several months now).  The West, the last region to register a more-bad-than-good index value -- and clearly the hottest of the hot markets according to the HMI -- in fact remains the only part of the country where things are continuing to deteriorate.    

Given the low values of these index numbers this may be a weak reed to clutch, but doesn't that look like the very picture of bottoming out?

(Thanks to Brent Meyer for a big assist on this one.)