Residential building increased 6% in September to a seasonally adjusted annual rate of $116.7 billion, according to McGraw-Hill Construction. This in turn is spurring new confidence among homebuilders, who also saw business increase in October, according to a monthly survey from the National Association of Home Builders and Wells Fargo (WFC). However, the numbers are largely below expectations. Single-family housing construction increased 11% from last year for the entire nation. In the Northeast and South Atlantic region, construction increased 16%. Still, while increases continue from a year ago, the growth seen in recent months continues to come up short of expectations. “The increase for single family housing this year is turning out to be smaller than previously estimated, given the dislocation caused by the expiration of the homebuyer tax credits plus the uncertainty created by this fall’s freeze on foreclosures," said Robert Murray, vice president of economic affairs for McGraw-Hill. But the NAHB/Wells Fargo index, which measures builder confidence, increased to 16 in October from the month before. It is the first rise registered in five months. NAHB Chairman Bob Jones said builders are starting to see interest from homebuyers, and this might mean more sales in the coming months. Jones, however, tempered his own optimism, too. "Because most builders still have no access to credit for building homes, there is a real concern that we will not be able to meet the pent-up demand when consumers are ready to get back in the market," Jones said. "This problem threatens to severely slow the housing and economic recovery." Write to Jon Prior.