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Housing starts rose a solid 5% in May with permits down 4.6%. Starts are more important so this was a good report.

Mortgage News Daily reports Housing Starts Rebounded in May, Permits Still Lag.

Residential construction data was mixed for May as reported on Tuesday by the U.S. Census Bureau and the Department of Housing and Urban Development. Housing starts recovered strongly from their April loss while permits continued lower.

Housing starts were at a seasonally adjusted annual rate of 1,350,000, a 5.0 percent improvement from April's revised, (from 1,287,000) 1,286,000 units. The May number was up 20.3 percent from the estimate reported for last May of 1,122,000 housing starts.

Starts were right at the top of the estimates provided by analysts to Econoday. They were looking for results in the range of 1,270,000 to 1,350,000 with a consensus of 1,320,000.

Thus far in 2018 there have been 531,000 housing starts, an 11.0 percent increase over the 478,500 starts in the first five months of 2017. Single family starts are up 9.8 percent for the year-to-date (YTD) to 368,200 versus 335,200 in 2017.

There were 1,301,000 permits issued on a seasonally adjusted annual basis in May, down 4.6 percent from 1,364,000 units in April. April's number was an upward revision from the original estimate of 1,352,000. Permitting was 8.0 percent higher than the previous May.

Housing units were completed at an annualized rate of 1,291,000 units, up 1.9 percent from the rate in April of 1,267,000, revised from 1,257,000. The May rate is 10.4 percent higher than in May 2017. Single family units came on line at an 11.0 percent increase over April and 11.5 percent higher than a year earlier at 890,000.

Those who view the report as "mixed" are likely to say permits are a leading indicator of starts. On that basis they are looking a a leading indicator of a leading indicator as starts are generally viewed as a leading indicator of the economy.

Regardless, the chart shows both starts and permits are stair-stepping higher.

Data coming in so far this quarter has been stronger than I expected. Second-quarter GDP looks increasingly likely to be solid.