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 and followed April’s 1.07 million annualized rate that was the most since November, a Commerce Department report showed today in Washington. Permits, a proxy for future construction, decreased, reflecting a decline in the volatile multi family 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.
“We’ going to see a bounce back after weather held everything down in the first quarter,” Carl Riccadonna, senior U.S. economist at Deutsche Bank Securities Inc. in New York, said before the report. “Things are moving in the right direction. There’s going to be more demand for housing, with some of it rental and some ownership.”
Another report today showed the consumer price index increased 0.4 percent after climbing 0.3 percent the prior month, according to figures from the Labor Department. Costs rose 2.1 percent in the past 12 months after a 2 percent year-over-year gain in April.