Nationwide residential construction starts spike in May

New permits and construction starts on homes with five units or more powered a strong new residential construction report, released today by the Department of Commerce. New building permits issued in May rose 8.7 percent from April and 5.2 percent from May 2010 to a seasonally adjusted annual rate of 612,000 — the highest rate in 2011. Housing starts also jumped over the month before by 3.5 percent to an annual rate of 560,000 in May, but that’s still 3.4 percent below the rate achieved a year ago. The positive indicators were mostly a result of growth in the five-units-or-more sector. In May, permits issued for such housing jumped 29.3 percent from the previous month, and 49.6 percent compared with last year. Housing starts of that sort rose 8.9 percent over April and 24.1 percent from May 2010. The report indicates a brighter future for the housing market, but the current market remains stagnant. On a seasonally adjusted annual basis, just 544,000 homes were completed in May 2011, 0.4 percent greater than April’s rate, yet 22.5 percent less than the rate achieved in May 2010. In a healthy economy, 1.2 million homes are completed on an annual basis. — Adam Fusfeld