Home-builder sentiment fell in June by the sharpest amount since the height of the financial crisis as the expiration of a popular homebuyer tax credit dimmed prospective sales, the National Association of Home Builders said on Tuesday.

The NAHB/Wells Fargo Housing Market index dropped 5 points to 17, the sharpest point decline since November 2008, the group said in a statement. The sharper-than-expected decline followed two successive increases as the tax credit ran its course.

Economists polled by Reuters had expected the index to fall slightly to 21. A reading below 50 indicates more builders view sales conditions as poor than good. The index has not been above 50 since April 2006.

Builders still remain very cautious and are aware that several factors could impede the nascent housing recovery, including serious problems in obtaining financing for the production of housing, faulty appraisal practices and competition from short sales and foreclosed properties, said David Crowe, NAHB chief economist.

All three subindexes of the Housing Market Index, including a measure of future homebuilding activity, saw declines in June.

The current sales conditions gauge fell six points to 17, the sharpest drop since August 2006 and the lowest level since March. The sales expectations measure for the next six months fell four points to 23, the lowest level since March 2009.

The traffic of prospective buyers index fell two points to 14.

(Reporting by Corbett B. Daly; Editing by Andrea Ricci)