U.S. housing starts slipped in May as the construction of multi-family housing units dropped, but further gains in building permits signaled a rebound that would support economic growth in the second quarter.
Figures released by the U.S. Commerce Department showed groundbreaking fell 0.3% to a seasonally adjusted annual pace of 1.16 million units. May's decline followed a 4.9% surge in April. Building permits rose 0.7% to a 1.14-million unit rate in May.
Though the pace of home building slowed after a brisk first quarter, housing remains a pillar of strength for the economy. Residential construction added almost six-10hs of a percentage point to first-quarter gross domestic product, the biggest contribution in more than three years.
The economy grew at a 0.8% annualized rate in the first quarter. The Atlanta Federal Reserve left its growth forecast for the second quarter unchanged at a 2.8% pace after Friday's housing starts data.
Economists had forecast housing starts falling to a 1.15 million-unit pace last month.
