US builders start work on more single-family homes

Associated Press

WASHINGTON

U.S. builders started work on more single-family homes in May and requested the most permits to build homes and apartments in 31/2 years. The increase suggests the housing market is recovering slowly even as other areas of the economy have weakened.

The Commerce Department said Tuesday that builders broke ground on 3.2 percent more single-family homes in May, the third-straight monthly increase.

Overall housing starts fell 4.8 percent last month to a seasonally adjusted annual rate of 708,000. But that was entirely because of a 21.3 percent plunge in apartment construction, which can be volatile from month to month.

The government also said April was much better for housing starts than first thought. The government revised the April starts to 744,000 — up from an initially reported 717,000 and the fastest building pace since October 2008.

And builders are more optimistic about the next 12 months. They requested more permits to build homes, a gauge of future construction. Permits increased to a seasonally adjusted rate of 780,000 — the most since September 2008.

Even with the gains, the rate of construction and the level of permits requested remain roughly half the pace considered healthy. Yet the increases add to other signs that the home market finally may be starting to recover nearly five years after the housing bubble burst.

The mostly positive report contributed to a strong day on Wall Street. The yield on the 10-year Treasury note ticked higher after the report was released. Stocks also increased.