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It was a May to remember in the housing market, according to new data from the U.S. Census Bureau and the Department of Housing and Urban Development, with home construction surging at its fastest rate in more than a year.

Single‐family housing starts in May were at a rate of 997,000, a robust 18.5% increase above the revised April figure of 841,000. Privately‐owned housing starts in May were at a seasonally adjusted annual rate of 1.63 million, a vibrant 21.7% spike above the revised April estimate of 1.34 million and 5.7% above the May 2022 rate of 1.54 million.

Single‐family authorizations in May were at a rate of 897,000, up 4.8% from the revised April figure of 856,000. Privately‐owned housing units authorized by building permits in May were at a seasonally adjusted annual rate of 1.49 million, up 5.2% from the revised April rate of 1.47 million but also 12.7% below the May 2022 rate of 1.7 million.

Single‐family housing completions in May were at a rate of 1 million, up 3.9% from the revised April rate of 971,000. Privately‐owned housing completions in May were at a seasonally adjusted annual rate of 1.5 million, which is 9.5% above the revised April estimate of 1.38 million and also 5% above the May 2022 rate of 1.44 million.

“The May housing starts data and our latest builder confidence survey both point to a bottom forming for single-family residential construction earlier this year,” said National Association of Home Builders Chief Economist Robert Dietz. “There have been some improvements to the supply-chain, although challenges persist for items like electrical transformers and lot availability. However, due to weakness at the start of the year, single-family housing starts are still down 24% on a year-to-date basis.”

Nonetheless, Dietz predicted the new data could be start of a wave of positive economic developments.

“Additional housing supply is good news for inflation data, because more inventory will help reduce shelter inflation, which is now a leading source of growth for the CPI,” he said.