US housing starts jumped 5 pct. in May off Midwest building

This May 25, 2018, photo shows a home under construction in Hampton Township, Pa. On Tuesday, June 19, the Commerce Department reports on U.S. home construction in May. (AP Photo/Ted Shaffrey)

WASHINGTON — A surge of construction in the Midwest drove U.S. housing starts up 5 percent in May from the prior month.

The Commerce Department said Wednesday that housing starts rose to a seasonally adjusted annual rate of 1.35 million, the strongest pace since July 2007. All of May's construction gains came from a 62 percent jump in the Midwest, while building slumped in the Northeast, South and West. Home construction can be volatile on a monthly basis, so May's gains may be a blip rather than a trend.

The solid job market has helped to boost demand for new homes. Housing starts have risen 11 percent so far this year, with gains for both single family houses and apartment buildings. Permits to build tumbled 4.6 percent in May, but permits are running 8.9 percent higher year-to-date.

Still, builders are concerned that tariffs announced by President Donald Trump that could affect steel, aluminum and lumber would make construction much more expensive, possibly limiting how many properties are built.

The risk of trade war with Canada caused builder confidence to sink this month. The National Association of Home Builders/Wells Fargo builder sentiment index released Monday fell two points to 68 this month. Any reading above 50 signals expansion.

The home builder association said higher lumber prices have increased the price of a new single-family home by $9,000 since January 2017.

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