By JOSH BOAK
AP Economics Writer
WASHINGTON (AP) — A surge of construction in the Midwest drove U.S. housing starts up 5 percent in May from the previous month.
The Commerce Department said on Wednesday that housing starts rose to a seasonally adjusted annual rate of 1.35 million, the strongest pace seen since July 2007. All of May’s construction gains came from a 62 percent jump in the Midwest. Building meanwhile slumped in the Northeast, South and West. Home construction can fluctuate wildly from month to month, so May’s gains may be a blip rather than a trend.
The solid job market has helped boost demand for new homes. Housing starts have increased by 11 percent so far this year, and gains have been seen in both single-family houses and apartment buildings. The number of permits issued to build decreased by 4.6 percent in May, but permits are running at a rate that is 8.9 percent higher year-to-date.
Still, builders are concerned that President Donald Trump’s recently announced tariffs — which could affect the price of steel, aluminum and lumber — would increase costs and slow the pace of construction.
The risk of a trade war with Canada caused builder confidence to sink this month. The National Association of Home Builders/Wells Fargo builder sentiment index, which was released on 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.