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WASHINGTON (

TheStreet

) -- June housing starts spiked 14.6%, but the surge was likely a result of builders playing catch up with orders that were delayed due to bad weather.

Home construction came in at a better-than-expected five-month high for June, while applications for building permits rose 2.5%, indicating that the housing market may be picking up steam.

>> 10 Top Buy-Rated Real Estate Stocks for 2011

The Commerce Department said early Tuesday that housing starts came in at a seasonally adjusted annual rate of 629,000 in June, a five-month high. The figure compares with a revised May rate of 549,000 housing starts and came in better than the rate of 570,000 economists had expected, according to consensus estimates listed on

Briefing.com

. The housing starts rate in May originally was reported at a pace of 560,000.

Applications for building permits rose 2.5% to a seasonally adjusted annual rate of 624,000, higher than the revised May rate of 609,000, and better than the expected rate of 609,000. May's building permits rate was originally reported at 612,000.

Building permits are viewed as an indication of future home construction.

Stocks in the homebuilder sector were mostly higher Tuesday.

The

SPDR S&P Homebuilders

(XHB)

and

iShares Dow Jones US Home Construction

(ITB)

, exchange-traded funds that tracks the sector, closed higher by 2.7% and 3.1%, respectively.

Among individual builders,

D.R. Horton

(DHI)

jumped 5.7%,

Lennar

(LEN)

gained 6.6%,

PulteGroup

(PHM)

added 3.5% and small-cap builder

KB Home

(KBH)

closed higher by 3.1%.

--

Written by Miriam Marcus Reimer in New York.

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Miriam Reimer

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