WASHINGTON – U.S. housing starts surged an unexpectedly large 11.6 percent in May, the biggest percentage rise in almost seven years and a reversal of two straight months of falls, the government said Tuesday.
Ground breaking for new homes jumped to a seasonally adjusted 1.733 million annual rate from a downwardly revised 1.553 million rate in April, the biggest climb since July 1995, the Commerce Department said. Single family starts -- the largest category of activity -- jumped 9.6 percent, an increase also not matched since July 1995, Commerce said. chief strategist for Global Partners Securities.
Permits, an indicator of builder confidence in future activity, rose 2.6 percent.
Regionally, starts climbed 6 percent in the South, the busiest home-building region, and 10 percent in the West, the next-most-active part of the country for construction. New home building rocketed 24 percent in the Midwest and 22.4 percent in the Northeast.
Many economists had believed last year's torrid pace of homebuilding was set to cool but the sector has proved more resilient than expected as mortgage rates have stayed below 7 percent, luring buyers. The three-year stock market slump and steadily increasing home values have made real estate an attractive investment.