Housing starts fell more than expected and building permits surged in May.
Starts fell 11.1% to an annualized pace of 1.04 million.
Building permits rose 11.8% to an annualized pace of 1.1 million, the most since January 2007.
Economists had forecast that starts fell 4% to an annualized pace of 1.09 million in May, according to Bloomberg. In April, housing starts jumped 20.2% to an annualized pace of 1.135 million, the highest since November 2007.
The consensus forecast for building permits was for a 3.5% drop to an annualized pace of 1.1 million.
Permits for single-family homes rose 2.6% in the month at a rate of 683,000, and for privately owned units, permits rose 11.8% month-over-month. Permits for multi-family homes rose by 592,000.
In an email after the data, Realtor.com chief economist Jonathan Smoke wrote: "The increasing level of new construction is entirely consistent with the strong demand and corresponding price gains we have been seeing in both rents and home prices. Given the tight supply conditions in many major markets, signing a contract on a to-be-built home is one of the ways consumers can avoid being outbid in the quest to buy a home."
"Builders are more confident as a result of seeing more traffic. Indeed, the last time that NAHB’s housing market index, the leading measure of homebuilder sentiment, was higher than yesterday’s reported number, was in 2005 at the height of the housing bubble."
Permits in white... starts in yellow pic.twitter.com/0fNws3NpN8— Ed Bradford (@Fullcarry) June 16, 2015
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