Construction of new homes leapt back in May after dropping sharply a month earlier, the government reported on Tuesday, signaling that the housing and construction markets may be hitting a bottom.
Housing starts in the United States rose 17.2 percent from April — far exceeding economists’ expectations — as construction of single-family homes increased for a third month. Construction of apartment buildings and condominiums rebounded after falling steeply in April.
Building permits rose 4 percent for the month, but housing completions fell 3.3 percent from April.
Over all, housing starts in May increased to a seasonally adjusted annual rate of 532,000, an improvement from earlier this year but still down 45.2 percent from the pace of home construction in May a year ago.
And while these levels of construction could mark a bottom, they are not likely to be the starting blocks of a turnaround, experts said.
Homebuilders are likely to remain wary of breaking ground on new projects, economists said. Credit markets remain tight for construction loans and potential buyers are still wary about losing their jobs or further declines in home values.