US housing starts jump in May

[Naveed Yaseen]

WASHINGTON: New US housing starts and permits surged in May from record lows, while wholesale prices were muted despite higher gasoline costs, indicating the economy was moving closer to the end of a deep recession.

The Commerce Department said on Tuesday housing starts jumped 17.2%, the biggest rise in three months, to an annual rate of 532,000 units. This was as ground-breaking activity for multifamily homes surged 61.7% after diving 49.4% in April.

Even more encouraging for the housing sector, which is at the center of the longest US output decline since the Great Depression, single family starts rose 7.5%, the largest gain since January 2006.

Ground breaking activity for single-family homes has now risen for three straight months, an indication that housing investment could be less of a drag on the economy in the quarters ahead, if the trend continues.

A separate report from the Labour Department showed prices paid at the farm and factory gate increased by 0.2% versus a 0.3% April rise.

Prices compared with a year ago notched their steepest falls since 1949, which should help to ease market fears that inflation could soon be stalking the economy after the recent spike in longer-dated government bond yields.

While new housing starts rose on a monthly basis in May, they dived 45.2% compared to the same period a year ago, the Commerce Department said.

New building permits, which give a sense of future home construction, rose 4%, the biggest gain since June 2008, to 518,000 units in May, the Commerce Department said. reuters

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