Beating expectations, U.S. housing construction soared in June to its highest level in five months, according to the Commerce Department. "Work began on 629,000 houses at an annual pace, up 15 percent from May and the highest level in five months," reports Bloomberg. "The level topped the most optimistic forecast in a Bloomberg News survey of 71 economists. Building permits, a sign of future construction, unexpectedly climbed 2.5 percent."
Unfortunately, the rate of housing starts is still less than a third of what it used to be at the height of the housing boom. "In the grand scheme of things, it's nice to see it jump higher, but it doesn't take us out of the range we've been in," David Mann, senior currency strategist at Standard Chartered, tells Reuters. "So there's still an extremely long way to go before we can be sure there's a serious recovery underway."
A senior economist at Capital Economics in Toronto gives a similar appraisal to Bloomberg. “I wouldn’t be surprised to see starts edge up gradually, but the bigger picture is it’s still at a very depressed level.” The remaining problems in the housing market continue to be shrinking home values and long delays in processing foreclosures. "Confronted with plummeting home values, Americans are shunning home ownership, pushing up demand for rentals," reports Reuters. "That has resulted in a rise in groundbreaking for multi-family homes in recent months and is helping construction to stabilize."