Both the single-family and multifamily components of the market posted large increases, and every region of the country recorded solid gains in housing production.
"It's good to see that the housing market is back up to its first-quarter pace after some slippage in March and April - the 'payback months' following unusually good weather conditions which spurred exceptionally strong production in the first part of the year," said Gary Garczynski, president of the National Association of Home Builders (NAHB). "Housing is still doing its part to keep the economic recovery going forward."
Garczynski attributed the impressive rebound largely to favorable interest rates on home mortgages. Rates on long-term contracts averaged 6.8 percent in May, and have since edged downward to 6.7 percent, while adjustable-rate mortgages (ARMs) have been available for less than 5 percent.
Single-family housing starts rose 9.6 percent to a seasonally adjusted annual rate of 1.39 million units in May, their highest rate since February. Meanwhile, multifamily starts rose 20.3 percent to a rate of 344,000 units, partially offsetting a big dip in the previous month. Regionally, starts rose across the board in May, posting double-digit gains of 22.4 percent in the Northeast, 24 percent in the Midwest and 10 percent in the West. The South, which is the nation's largest housing market, registered a solid 6 percent gain.
"While we may see some tapering off from this high rate of housing production in months to come, it's clear that the housing component of Gross Domestic Product is still providing good support to the budding economic recovery," said NAHB Chief Economist David Seiders. NAHB is currently forecasting about 1.64 million units for 2002 as a whole, up 2.5 percent from the strong 1.60 million-unit pace recorded for last year.