The Commerce Department released a report on Wednesday showing a significant rebound by new residential construction in the U.S. in the month of June.
The report said housing starts shot up by 3.0 percent to an annual rate of 1.353 million in June after plunging by 4.6 percent to a revised rate of 1.314 million in May.
Economists had expected housing starts to jump by 2.6 percent to a rate of 1.310 million from the 1.277 million originally reported for the previous month.
The rebound by housing starts came as a spike by multi-family starts more than offset a notable decrease by single-family starts.
The Commerce Department said multi-family starts skyrocketed by 19.6 percent to an annual rate of 373,000, while single-family starts slumped by 2.2 percent to an annual rate of 980,000.
\"Builders are pulling back on single family projects as they anticipate the broader economic slowdown,\" said Jeffrey Roach, Chief Economist for LPL Financial. \"Elevated mortgage rates continue to weigh on prospective buyers but demand for condos seems to be quite resilient.\"
\"Multifamily projects are supporting the construction industry after a bit of a stall earlier this year,\" he added. \"We could expect a modest rebound in single family projects if the Fed cuts and mortgage rates fall.\"
The report also said building permits surged by 3.4 percent to an annual rate of 1.446 million in June after tumbling by 2.8 percent to a revised rate of 1.399 million in May.
Building permits, an indicator of future housing demand, were expected to rise by 0.3 percent to an annual rate of 1.390 million from the 1.386 million originally reported for the previous month.
While multi-family permits spiked by 15.6 percent to an annual rate of 512,000, single-family permits dove by 2.3 percent to an annual rate of 934,000.
The National Association of Home Builders released a separate report on Tuesday showing homebuilder confidence in the U.S. unexpectedly edged lower in the month of July, with high mortgage rates continuing to put a damper on sentiment,
The report said the NAHB/Wells Fargo Housing Market Index dipped to 42 in July from 43 in June. Economists had expected the index to inch up to 44.
With the unexpected decease, the housing market index dropped to its lowest level since hitting 37 last December.