US housing starts jumped 5 percent in May, but slumped in N.E.

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Construction workers try to fix a home with serious ice dam damage last winter.
. Suzanne Kreiter / Globe staff/File

WASHINGTON — A surge of construction in the Midwest drove US housing starts up 5 percent in May from the prior month.

The Commerce Department said Wednesday that housing starts rose to a seasonally adjusted annual rate of 1.35 million, the strongest pace since July 2007. All of May’s construction gains came from a 62 percent jump in the Midwest, while building slumped in the Northeast, South, and West. Home construction can be volatile on a monthly basis, so May’s gains may be a blip rather than a trend.

“New-home construction activity soared to its highest level in over a decade, which is fantastic news as more housing inventory will be available as the year proceeds, but an additional 20 percent to 25 percent gain in home construction is needed to make the market more balanced,” Lawrence Yun, chief economist for the National Association of Realtors, said in a statement.

The solid job market has helped to boost demand for new homes. Housing starts have risen 11 percent so far this year, with gains for both single-family houses and apartment buildings. Permits to build tumbled 4.6 percent in May, but permits are running 8.9 percent higher year-to-date. “Over 40 percent of the rise this year is being driven by booming Western markets (up 15.1 percent so far this year),” Sam Khater, Freddie Mac chief economist, said in a statement. “The pipeline of units under construction rose 5.3 percent from a year ago, and is at the highest level in nearly 11 years. While the rise is good news, it’s still not enough for a hot real estate market that is starving for inventory during the peak summer sales season.”

Still, builders are concerned that tariffs President Donald Trump announced could make construction much more expensive, possibly limiting how many properties are built.

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 released 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.

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