Construction of new homes continued to increase this spring, with Housing Starts rising 21.7% from April to May. This data measures when excavation actually begins for a home’s foundation or footing. Building Permits, which are more indicative of future supply, rose 5.2% for the month. Starts and Permits for single-family homes also increased in May, though at a smaller percentage than they did for multi-family units.

What’s the bottom line? NAHB Chair Alicia Huey said, “Mirroring rising builder sentiment, single-family permits and starts increased in May as builders boosted production to meet unmet demand.” Yet, while single-family starts and permits have risen since the beginning of the year, they are still significantly lower than they were a year ago.

Overall, the housing sector remains undersupplied and not enough inventory is heading to the market. With single-family homes remaining in high demand among buyers, the imbalance between supply and demand should continue to be supportive of prices.