Nationwide housing starts rose 6.8 percent to a seasonally adjusted annual rate of 914,000 units in May due primarily to increased production on the multifamily side, according to newly released data from HUD and the U.S. Census Bureau.

"The outlook for housing continues to brighten as builders respond to increased demand for new homes and rental apartments," said National Association of Home Builders (NAHB) Chairman Rick Judson, a home builder from Charlotte, N.C. "While challenges with regard to the cost and availability of building materials, lots and labor are still keeping the pace of improvement in check, both builders and consumers are more confident about their prospects in the current marketplace."

"Unusually wet weather across much of the country likely dampened the pace of single-family production in May," noted NAHB Chief Economist David Crowe. "Nevertheless, the strength in permit issuance for single-family units -- and stockpiling of permits for future use -- provides further evidence that housing continues on a slow and steady path to recovery."

While single-family housing starts held at a solid but virtually unchanged pace of 599,000 units in May, multifamily production bounced back from an over-correction in the previous month with a 21.6 percent gain to 315,000 units. From a regional perspective, combined starts activity was mixed in the month, posting gains of 17.8 percent in the South and 5.7 percent in the West and declines of 9.0 percent in the Northeast and 13.7 percent in the Midwest.

Issuance of new building permits declined 3.1 percent to a seasonally adjusted annual rate of 974,000 units in May. This reduction was due entirely to a 10.0 percent decline to 352,000 units on the multifamily side following a spike in that sector's permits in April. Meanwhile, single-family permits edged up 1.3 percent to 622,000 units in May -- their best pace in five years.  Regionally, permits rose 4.0 percent in the Northeast but declined 6.1 percent in the Midwest, 3.3 percent in the South and 3.5 percent in the West in May.