A crisis in confidence? Not really

On July 16, the National Association of Home Builders/Wells Fargo Housing Market Index posted its strongest reading since January 2006.

On the following day came the Commerce Department's residential construction numbers — a disappointing 9.9% decline in the pace of housing starts nationwide.

Is this a serving of humble pie for the overconfident? Maybe. But it's more likely a case of normal ups and downs of a recovering housing market, according to the NAHB.

Commenting on the drop in total starts, the NAHB's chief economist David Crowe explained: "The large dip in multi-family production in June follows a boost of activity in May, and is consistent with the volatility that has come to characterize that sector as well as the uneven pace of the housing recovery."

When you look at single-family starts, the story was far less disappointing. Crowe points to gains in both single-family starts and single-family building permits in three out of four regions in June (see chart). That, he said, "is a positive sign that's in keeping with our forecast as well as recent surveys."