Despite numbers that would imply the contrary, homebuilder confidence continued to increase this month.

Builders were a mighty confident bunch this month, with the NAHB’s Housing Market Index, the industry’s leading measure of homebuilder confidence, rising to its highest level since January.

Jumping two points to a total of 55, the index has now increased three straight months; also, in staying above the magic 50 number, the index still indicates that more homebuilders see market conditions as good than bad.

Uniform Gains in Homebuilding

All the measures of the Housing Market Index showed positive movement this month:

• The component measuring current sales conditions rose two points to 58.
• Meanwhile, the component for expectations of future sales rose two points to 65; for some time now, the expectations component has led the overall index forward.
• Finally, the component measuring prospective buyers rose three points to 42.
• Regionally, the Midwest posted a seven-point increase to 55, and the West registered a four-point gain to 56; the Northeast posted a two-point gain to 38 and the South was up one point to 52.

David Crowe, the NAHB’s chief economist, said that a number of factors went into the Housing Market Index’s positive readings.

“Each of the three components of the HMI registered consecutive gains for the past three months, which is a positive sign that builder confidence appears to be firming following an uneven spring,” Crowe said. “Factors contributing to this rise include sustained job growth, historically low mortgage rates and affordable home prices, which are helping to unleash pent-up demand.”

Something We Don’t Know?

What continues to fascinate, regarding homebuilding and the Housing Market Index, is now irreconcilable builder confidence seems to be with actual housing trends.

Through July, for instance, housing starts were up 21.7 percent from the year before, but multifamily housing (which the Housing Market Index does not track) accounted for the vast majority of that increase; furthermore, single-family housing starts were up just 3 percent year-to-date through July, while multifamily is up 24 percent – and though permits for single family were up 0.9 percent from June to July, multifamily permits were up 27 percent.

Is there something we’re missing? Or, perhaps, builders are seeing more movement and interest on the ground than the Census Bureau’s numbers are betraying? We’ll have to wait and see!