updated 3/17/2008 8:25:30 PM ET 2008-03-18T00:25:30

A reading of U.S. homebuilders’ sentiment was stuck near its lowest level in March, as the housing industry’s malaise gave it little reason to improve.

The National Association of Home Builders said Monday its housing market index for March was the third lowest reading on record. The index, which gauges builders’ perceptions of current conditions, interest from potential buyers and expectations for home sales over the next six months, came in at 20 in March for the second-consecutive month.

The index has been at 20 or below since September, a sign of persistent pessimism from builders. The report is derived from a survey of about 400 residential developers nationwide.

“Interested buyers are out there, but they are either reluctant to go ahead with a home purchase or they are unable to find mortgage financing they can afford,” said the trade group’s president, Sandy Dunn, a homebuilder from Point Pleasant, W. Va. in a prepared statement.

Index readings higher than 50 indicate positive sentiment. The seasonally adjusted index has been below 50 since May 2006. It plummeted from 36 in March 2007 to 18 in December.

Tighter lending standards, rising defaults and fear about the housing market’s future have sidelined buyers, an absence felt acutely by homebuilders such as D.R. Horton Inc., Pulte Homes Inc. and Centex Corp.

Confidence fell in the Northeast and West, remained unchanged in the Midwest and inched up in the South. Traffic from prospective buyers also remained unchanged, the trade group said.

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