US home construction pace slows in May

The annual pace of new construction of US homes slowed in May after an April surge, but overall the housing market looked set on moderate growth, government data showed Friday.

Total housing starts dipped 0.3 percent to a seasonally adjusted annual rate of 1,164,000 units last month, but were up 9.5 percent from a year ago, the Commerce Department said.

The April surge to an annual pace of 1,167,000 units remained the strongest pace since last November.

In May, construction of single-family homes, accounting for more than two-thirds of the market, rose 0.3 percent, while starts on buildings with at least five units advanced 1.3 percent.

"The monthly decline is due most likely to starts for structures with two to four units, as single-family starts and starts for buildings with five or more units increased slightly," said Andres Carbacho-Burgos of Moody's Analytics.

Data covering the first five months of the year gave a broader picture of the trend. Total starts were up 10.2 percent from the year-earlier period, led by a solid 14.5 percent increase in single-family homes.

The construction picture was mixed across the country in May. Housing starts in the Northeast fell 33.3 percent from April, followed by a much smaller drop in the Midwest. The West gained 14.4 percent and construction also rose slightly in the South.

Total building permits, which signal the path of future construction, rose 0.7 percent from April.

A survey of homebuilders showed Thursday that confidence in the market for newly constructed single-family homes rose in June, suggesting the market would regain some momentum.

The National Association of Home Builders index climbed two points to 60, the highest reading since January.

"Builders in many markets across the nation are reporting higher traffic and more committed buyers at their job sites," said NAHB chairman Ed Brady, in a statement.