Housing Starts Surge in May, Juicing Market

Everyone say "thank-you" to the homebuilders.

Because of them, some investors could see the light today after a Monday spent in darkness. Renewed hope of an end to the housing slump following news of a 17% surge in new starts sent many construction company shares into positive territory during the morning session.

Builders whipped out their shovels and dug in at a big rate in May as new housing starts improved to an annual rate of 532,000 in May from 454,000 in April. Though the month-over-month news beat most estimates, the numbers are still off 45% from last May's rates.

Still, according to the U.S. Department of Commerce, building permits -- what some use as an indicator of housing activity in the future -- grew to 518,000 in May, representing a 4% monthly surge. Even more stunning was the 77% month-over-month surge in new starts for apartments and other buildings with five units or more. Those numbers came to a rate of 124,000, far outpacing the 70,000 rate in April.

Building permits for single-family housing also leaped 7.9%, while starts for those homes jumped 7.5% to 401,000.

In the morning, Toll Brothers(TOL Quote) was up 2.4% following the news. Pulte Homes(PHM Quote) was changing hands in positive territory, up 3.7% to $8.93, while KB Home(KBH Quote) saw its shares rise 42 cents to $13.66.