Encouraging news broke this week signaling that the 18-months-long housing slump may have bottomed out. Construction of new homes and apartments jumped 17.2 percent in May, the largest increase in three months, according to the U.S. Commerce Department. The spike comes after construction fell in April to a record low of 454,000 units. May's seasonally adjusted rate of 532,000 was better than the 500,000 units economists had predicted.
Applications for building permits, seen as an indicator for future development, also rose in May. The increase includes a 7.5 percent rise in construction of single-family homes and a 61.7 percent increase in multi-family units. The West led the surge with a 28.6 percent increase, followed by an 11.1 percent increase in the Midwest. The South had a 6.8 percent increase; the Northeast only a gain of 2 percent.
Even with the promising news, analysts don't expect a quick rebound in housing, since the economy is still shedding jobs and home prices are falling in many places, making people hesitant to commit to buying a new home. Many economists say any sustained rebound isn't expected to take hold until next spring. That's partly due to the huge surplus of unsold homes and a record wave of mortgage foreclosures dumping more unsold homes on the market.
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