New homes up, but still low

Breaking ground on new U.S. housing units rose 3.5 percent in May after a large decline in April, according to the latest statistics from the U.S. Census Bureau and the Department of Housing and Urban Development.

Although privately owned housing starts rose during the month to 560,000, May's numbers were still 12 percent lower than those recorded in January and down 3.4 percent from the amount tallied in May 2010.

But Paul Dales, senior economist at Capital Economics in Toronto, says bad weather may have contributed to the slow recovery. Dales told MarketWatch that housing starts totalling one million units would be considered a healthy market.

But Dales does not see the market getting to that benchmark before 2015.

"Strong headwinds of excess supply, low household formation, and competition from foreclosed properties" will inhibit the housing starts to reach one million, he told the news source.

Builders remain hesitant to break ground on new units. According to The Associated Press, builders are competing with millions of foreclosures and plummeting home prices, and are uncertain about their own job security as well.

The AP reports the construction pace of single-family homes, which is about 80 percent of all residential construction, is below the 2010 rate. Three jobs are created for every home built, and $90,000 is generated in taxes, according to the National Association of Home Builders.  

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