Builders broke ground on 1 million U.S. homes in May, indicating the industry is picking up this quarter after a weather-induced slump to start the year.
The number of housing starts last month was in line with the median forecast of economists surveyed by Bloomberg News and followed April’s 1.07 million annualized rate that was the most since November, the Commerce Department reported June 17.
Permits, a proxy for future construction, decreased, reflecting a decline in the volatile multifamily category.
A strengthening job market and a retreat in mortgage costs in recent weeks is helping support residential real-estate following a lull in building in early 2014. Faster sales will prompt developers to step up construction, given supplies of homes on the market remain lean and property values are rising.
“Housing is fine,” said Brian Jones, a senior U.S. economist at Societe Generale, who forecast 1 million starts. “Demand is improving.”
The median forecast of 78 economists surveyed by Bloomberg projected May housing starts would come in at a 1.03 million pace. The prior month’s reading was similar to the previously reported pace.
Permits decreased 6.4 percent to a 991,000 annualized rate. They were projected to ease to a 1.05 million pace, according to the survey median. Applications for multifamily work dropped 19.5 percent, while those for single-family projects that make up the biggest share of the market rose 3.7 percent to the highest level since November.
Construction of single-family houses declined 5.9% to a 625,000 rate from 664,000 the prior month.
Work on multi-family homes, such as condominiums and apartment buildings, decreased 7.6% to an annual rate of 376,000.
Three of four regions had a decrease in starts last month, led by a 25.2% drop in the Northeast. Work began on 7.3% more houses in the South, today’s report showed.