Weakening job markets and lower consumer confidence likely contributed to a two-point decline in the National Association of Home Builders' (NAHB) Housing Market Index (HMI).

The HMI, which was revised downward one point to 58 in March, fell to 56 in April, the lowest reading since January.

"With long-term mortgage rates hovering around 7 percent, the financing climate for home purchases remains very good," said Bruce Smith, a home builder from Walnut Creek, Calif., and NAHB president. "However, recent signs of continued weakening in the broader economy—including higher unemployment figures and the University of Michigan's report showing lower consumer sentiment for early April—have likely played a role in builders lowering their assessments of current home sales and expected sales in the next six months."

The 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 and sales expectations for the next six months as "good," "fair," or "poor." They are also asked to rate traffic of prospective buyers as either "high to very high," "average" or "low to very low."

Scores for responses to each component are used to calculate a seasonally adjusted overall index, where any number over 50 indicates that more builders view sales conditions as good than poor.

Two out of three of the HMI's component indexes declined in April. The index for current single-family home sales and the index gauging expected sales in the next six months each dropped four points, to 62 and 63, respectively. Meanwhile, the index gauging traffic of prospective buyers rose three points to 41 in April.

"While significant strength remains in the overall housing market," said Smith, "builders are perceiving a bit more hesitancy among potential buyers. People are out there looking, but some are less likely to commit in the face of current economic conditions."