After reporting a sharp pullback in new residential construction in the U.S. in the previous month, the Commerce Department released a report on Wednesday showing housing starts rebounded in the month of May.
The Commerce Department said housing starts jumped by 3.6 percent to an annual rate of 1.572 million in May after plunging by 12.1 percent to a revised rate of 1.517 million in April.
Economists had expected housing starts to surge by 3.9 percent to a rate of 1.630 million from the 1.569 million originally reported for the previous month.
The rebound by housing starts came as single-family starts spiked by 4.2 percent to a rate of 1.098 million, while multi-family starts jumped by 2.4 percent to a rate of 474,000.
Meanwhile, the report said building permits slumped by 3.0 percent to an annual rate of 1.681 million in May after falling by 1.3 percent to a revised rate of 1.733 million in April.
Building permits, an indicator of future housing demand, had been expected to decrease by 1.7 percent to a rate of 1.730 million from the 1.760 million originally reported for the previous month.
With the bigger than expected decline, building permits fell to their lowest level since hitting a rate of 1.121 million last September.
Multi-family permits tumbled by 5.8 percent to a rate of 551,000, while single-family permits slid by 1.6 percent to a rate of 1.130 million.
Nancy Vanden Houten, Lead Economist at Oxford Economics, said housing stats are expected to move mostly sideways over the balance of 2021.
“Strong demand, a need for inventory and homebuilder optimism will keep a floor under activity, but builders continue to face supply constraints that may hamper or at least postpone construction,” Vanden Houten said.
On Tuesday, the National Association of Home Builders released a separate report showing homebuilder confidence in the U.S. unexpectedly decreased in the month of June.
The report said the NAHB/Wells Fargo Housing Market Index fell to 81 in June from 83 in May. The drop surprised economists, who had expected the index to come in unchanged.
With the unexpected decrease, the housing market index slipped to its lowest level since hitting 78 in August of 2020.