Housing starts climb 6.8% in May
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Home builders ramped up construction in May, providing an economic boost while they sought to take advantage of an improving housing market defined by low inventory.
Housing starts increased 6.8% from revised April figures to a seasonally adjusted annual rate of 914,000, the Commerce Department said Tuesday. That was 28.6% higher than May 2012.
The faster rate of construction was attributable primarily to an increase in multi-family construction. Building of single-family homes barely rose, ticking up 0.3%. The housing start numbers, while up, were lower than economists polled by Bloomberg News had expected.
Building permits, an indication of future construction, dropped 3.1% from April, to a seasonally adjusted annual rate of 974,000. Economists had expected a decline after building permits soared to a multi-year high in April.
The rate of building permits was still higher than a year earlier, though, and single-family-home permits hit a five-year high.
Housing starts fell month-over-month in the Northeast and Midwest, while rising in the South and West -- two regions that have markets that fell hard during the economic downturn but have recently seen swift price increases.
Southern California’s housing recovery: An interactive map
After years of anemic construction, home builders have been lured back into the market by rising home prices and the lack of existing homes for sale. That low inventory, along with low interest rates, investor demand and an improving economy, ignited a housing recovery that began last year.
In June, more builders saw market conditions as good rather than poor for the first time since 2006, according to the National Assn. of Homebuilders/Wells Fargo Housing Market Index.
An increase in new building is not only good news for construction workers, but for those in related industries such as heating and air conditioning, lumber and more.
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