For the second straight month, the confidence level of single-family homebuilders has waned a bit, as the Housing Market Index declined two points to 65 in February.

Granger MacDonald, chairman of the National Association of Home Builders, the organization that maintains the HMI, said builders remain optimistic despite the setback.

After jumping six points in December 2016, the HMI dipped in January, also by two points, but the index still remains well above its break-even point of 50.

Through monthly surveys, the HMI gauges builder perceptions about the current sales of single-family homes and sales expectations for the next six months. Builders are also asked to rate the traffic of prospective buyers. Scores for each component are then used to calculate each HMI, and any number above 50 means more builders view conditions as good than poor.

All three HMI components fell in February: current sales conditions dipped one point to 71; sales expectations in the next six months shed three points to 73; and buyer traffic dropped five points to 46.

"With much of the decline this month resulting from a decrease in buyer traffic, builders continue to struggle to minimize costs while dealing with supply side challenges, such as a lack of developed lots and labor shortages," said Robert Dietz, chief economist for the NAHB. "Despite these constraints, the overall housing market fundamentals remain strong and we expect to see continued growth this year as some of these concerns are addressed."