The Composite Housing Market Index reported by the National Association of Home Builders (NAHB) rebounded in this month's survey to 71, 4 points higher than in July. The index was even with last August's level.

The index of single family home sales expected in the next six months also rose 4 points. The current sales index gained 2 points.

After falling to a three-month low in July, the gauge of traffic of prospective buyers surged to 57, its highest in more than five years.

The fortunes of the housing market are widely viewed as related inversely to interest rates. This has generally been the case, with a negative correlation of 73% over the last 15 years between the Housing Market Index and the 10-year Treasury constant maturity yield. However, this relationship has broken down over more recent spans. Over the last 10 years, the correlation is only 38%, and it even swings to positive in the last five years. This behavior suggests that causation could be shifting the other way: that is, perhaps developments in housing demand are impacting interest rates so that as it strengthens, rates rise.

The NAHB index is a diffusion index based on a survey of builders. Readings above 50 signal that more builders view conditions as good than poor.

Visit the National Association of Home Builders using this link.