Housing starts surged well above expectations in May, crushing the forecast from every economics group and putting in the largest monthly gain in the number of homes started since January 1990. Looking at the details, gains were broad-based with three of four major regions and both single-family and multi-unit starts contributing. While one month doesn’t make a trend, housing starts are now at the highest level since the previous peak in April of 2022, before mortgage rates began to surge. This signals that the developers may have finally found their footing in what has been a challenging environment for sales. While 30-year mortgage rates continue to hover near 7% it looks like some of the sticker shock from the rapid run-up in financing costs last year is wearing off.
-Brian Wesbury, from here
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