(CN) — Housing starts surged to an 11-year high in May, driven by an acceleration in both single-family and multi-family construction, the Commerce Department said Tuesday.
Overall, housing starts jumped 5 percent in May, to a seasonally adjusted annual rate of just over 1.3 million units, the highest level since July 2007.
The construction of single-family homes increased 3.9 percent in May to a rate of 936,000 units. All of the gain was in the Midwest, where construction activity rose 62 percent. Housing starts fell in the Northeast, South and West, the report said.
Lawrence Yun, chief economist for the National Association of Realtors, described Tuesday’s report as “fantastic news.”
“The Midwest region experienced the biggest gain and hence the region will remain more affordable,” he said in statement on Twitter. “The more unaffordable West region will continue to experience an intense house shortage, as both housing permits and housing starts fell in that region.
“For the country as a whole, an additional 20 percent to 25 percent gain in home construction is needed to make the market more balanced,” Yun said.
The government also slightly revised its numbers for April down, to a seasonally adjusted annual rate of 1.2 million units.
But the moderating indicator in the report was building permits, a proxy for future construction, which fell 4.6 percent. Permits to build single-family homes fell 2.2 percent in May to a pace of 884,000 units, the lowest level since September 2017.
The solid job market has helped to boost demand for new homes. Housing starts have risen 11 percent so far this year, with gains for both single family houses and apartment buildings.