So much for the good news. One month ago, a report out from the National Association of Home Builders, in cooperation with Wells Fargo (NYSE: WFC) (NAHB/WFC), showed a brief-but-encouraging surge in housing industry confidence. Investors in homebuilder stocks like Toll Bros. (NYSE: TOL) and Pulte (NYSE: PHM) thrilled to the news that across the board, the numbers were "up."

Problem was, they weren't up enough. None of the three indices comprising the "Housing Market Index" (HMI) broke the 50% barrier indicating honest-to-goodness market revival. And as I pointed out last month "actual foot traffic [was] the weakest indicator of the three, while the 'pipe dream index' look[ed] strongest."

I didn't intend to be the bearer of bad news, but it does appear I was right:

Do you see what I see?
This month's NAHB/WFC update illustrates the perils of unfounded optimism, lacking actual data that supports it. No sooner had federal new-home buyers' subsidies expired in April, than confidence (of all three flavors) fell outta bed. Today we see the same indices that surged in May, falling right back down in June.

How bad was the snap-back? Rolling up the three trends into a single "composite" score, NAHB/WFC laments that the HMI suffered a 23% decline. Lackluster buying seems to have taken the industry aback, with NAHB Chairman Bob Jones opining: "The reduction in consumer activity may have been more dramatic than some builders had anticipated, which resulted in their lower confidence levels."

Do you see what I hear?
And therein, Fools, we may find Opportunity. For the details within today's data suggest a scenario for expectations ... underestimating results. Consider: Recent anemic sales caused a 23% decline in homebuilder confidence. But actual foot traffic by prospective buyers dropped only half that much -- 12.5%.

Conclusion: The news is bad. But it isn't as bad as the headline number makes it look.

Foolish takeaway
Now's the time to start looking for expectation mismatches on the long side in housing. With builders like Pulte and Toll -- and Lennar (NYSE: LEN) and Ryland (NYSE: RYL) besides -- all trading within a few points of book value, it won't take much of an overreaction to push these stocks into traditional "value" territory.

Stay frosty. Stay awake. A chance to profit could be yours to take.

Take the Foolish Rorschach test. Do you see something different in today's chart? Tell us about it below.