US housing starts jump past forecasts in May

New home construction easily outpaced economists' forecasts for last month, but some economists were wary.

According to the Department of Commerce, in seasonally adjusted terms housing starts jumped in May at a 21.7% month-on-month clip.

That pushed the annual rate of total starts to 1.631m (consensus: 1.4m), from a downwardly revised pace of 1.34m.

Starts for single-family homes meanwhile rebounded by 18.5% on the month.

Housing permits meanwhile rose by 5.2% during the month to 1.491m (consensus: 1.425m).

That was on top of an upwards revision to April's reading on permits from 1.401m to 1.417m.

"The ongoing bounce in housing starts and new home sales, and the surge in homebuilders’ stock prices, is fuelling the emerging narrative in parts of the commentariat that housing is now recovering. But the new home market is not the whole housing market," said Kieran Clancy, senior US economist at Pantheon Macroeconomics.

"A sustained recovery in housing requires a meaningful improvement in affordability, via lower mortgage rates, or falling home prices, or both. Neither will happen overnight."