US single-family homebuilding surged in May to its highest in more than a year and permits issued for future construction also climbed, suggesting the housing market may be turning a corner after getting clobbered by Federal Reserve interest rate hikes.

Single-family housing starts, which account for the bulk of homebuilding, rose 21.7 per cent to a seasonally adjusted annual rate of 1.631 million units last month from April’s downwardly revised 1.34 million, the Commerce Department said on Tuesday.

May’s rate was the highest since April 2022, which had been the highest since 2006.

The housing market has taken the biggest hit from the Fed’s fastest monetary policy tightening campaign since the 1980s, but recent data have suggested the worst may have passed.

A survey on Monday showed the National Association of Home Builders/Wells Fargo Housing Market index in June rose above the midpoint mark of 50 for the first time since July 2022 as a dearth of previously owned homes supported new construction. The index has rebounded by 77 per cent since December.

The average rate on the popular 30-year fixed mortgage has come down somewhat from last November’s high above 7 per cent.

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It averaged 6.77 per cent in the latest week, according to data from the Mortgage Bankers Association. But tightening credit conditions could make it harder for builders to access funding for new projects.

After lifting rates by 5 percentage points since March 2022, the Fed this month took a breather to assess the effects of its actions taken so far, though rate hikes are likely to resume next month with inflation still too high. REUTERS