The recent dip in mortgage rates has made homebuilders more hopeful that they can once again start pouring concrete and raising roofs. But most are hedging their bets and many are still lowering prices or offering incentives to attract buyers.

Builders' confidence rose from 34 to 37 points in December, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). The index is based on a monthly survey of builders that includes various factors. "The HMI index gauging traffic of prospective buyers in December rose three points 24, the component measuring sales expectations in the next six months increased six points to 45 and the component charting current sales condition held steady at 40," the report stated.

"Any number over 50 indicates that more builders view conditions as good than poor," it noted. The increase in December, therefore, while positive, indicates that there is a long way to go before homebuilders have a broadly optimistic outlook. Regionally, only the Northeast's HMI score rose above 50, with a two-point increase to 51 based on three-month moving averages. The Midwest dipped one point to 34, the South fell three points to 39 and the West sank four points to 31.