The National Association of Home Builders' monthly housing market index rose to a reading of 35 in August from 34 in July, compared with expectations for a decrease to a level of 33 in a survey compiled by Bloomberg as of 7:45 am ET.
The index was above a reading of 32 a year earlier.
The reading for single-family sales increased, while the readings for the six-month outlook, and buyer traffic were unchanged.
"While builder sentiment edged higher in August, builders continue to contend with high construction costs and broader economic uncertainty," NAHB Chairman Bill Owens said. "Rising gas and diesel prices are pushing up material costs, and spec home building remains weak as many prospective buyers stay on the sidelines."