US housing starts up an unexpected 3.6 per cent for June

US housing construction activity showed an unexpected jump for June, rising 3.6 per cent over the previous month, signalling that the housing market was improving despite a mixed economic outlook. Work started on more new homes in June than in any month since November, the Commerce Department said Friday.

Crude oil was up more than $1 a barrel with construction of single-family dwellings going up the most since 2004 – many taking it as a sign that the worst of the recession may have passed. For traders, with some green shoots of recovery showing up, prices looked likely to test $65.

Housing starts went up 3.6 per cent, to 582,000 units, a solid gain from 562,000 units in May and a much larger increase than the 532,000 figure forecast by economists. The gains were mainly in construction starts on single-family homes, which went up 14 per cent - the biggest rise since December 2004.

Market analysts said such a bounce was overdue after housing starts in April reached their lowest level in 17 years. They also pointed out that inventories of commodities, retail goods and now housing now appear to be reaching minimal levels where demand may finally begin to exceed supply.

Analysts also said low mortgage rates and federal tax credits for homebuyers would have helped buyers into the market. The federal programme offers an $8,000 tax credit to first-time home buyers, and will end 1 December.

The good news was laced with bad with experts pointing out that foreclosures have been rising. Foreclosures, they said, are the one part of the economy that's currently getting worse, even as all other negative numbers keep shrinking every quarter.

Another problem that persists is of the difficulty that builders are facing in finding financing, especially for multi-family units such as condominiums and apartments.

With sources of finance all but frozen, construction starts for multifamily units fell more than 25 per cent last month, the Commerce Department said Friday.