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U.S. Housing Starts Jump 4.3% In May But Miss Estimates

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New residential construction in the U.S. showed a notable rebound in the month of May, according to a report released by the Commerce Department on Wednesday, although housing starts still came in well below economist estimates.

The report said housing starts jumped by 4.3 percent to an annual rate of 974,000 in May after plummeting by 26.4 percent to a revised rate of 934,000 in April.

Economists had expected housing starts to soar by 22.9 percent to a rate of 1.095 million from the 891,000 originally reported for the previous month.

New construction of multi-family homes led the rebound in housing starts, surging up by 15.0 percent to a rate of 299,000 in May following a 33.2 percent nosedive to a rate of 260,000 in April.

Meanwhile, single-family family housing starts inched up by just 0.1 percent to a rate of 675,000 in May after tumbling by 23.4 percent to a rate of 674,000 in the April.

The Commerce Department also said building permits spiked by 14.4 percent to an annual rate of 1.220 million in May after plunging by 21.4 percent to a revised rate of 1.066 million in April.

Building permits, an indicator of future housing demand, had been expected to surge up by 14.3 percent to a rate of 1.228 million from the 1.074 million originally reported for the previous month.

Permits for single-family and multi-family homes both showed substantial rebounds. Single-family permits jumped 11.9 percent to a rate of 745,000, while multi-family permits vaulted by 18.8 percent to a rate of 475,000.

Despite the monthly increases, housing starts and building permits were down by 23.2 percent and 8.8 percent, respectively, compared to the same month a year.

"We look for strong demand, improving homebuilder confidence and an ongoing shortage of supply to support growth in housing starts over the rest of the year, but we still expect starts to be down on average across 2020 overall," said a note from economists at Oxford Economics.

On Tuesday, the National Association of Home Builders released a separate report showing a continued rebound in U.S. homebuilder confidence in the month of June.

The report said the NAHB/Wells Fargo Housing Market Index spiked to 58 in June from 37 in May, continuing to rebound from the nearly eight-year low of 30 set in April. Economists had expected the index to climb to 45.

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