Nationwide housing starts rebounded in May from record lows in the previous month, posting a 17.2% gain to a seasonally adjusted annual rate of 532,000 units, according to U.S. Commerce Department figures released on June 16.

       While driven largely by a double-digit gain in the volatile multifamily sector, the uptick also reflected a substantial gain on the single-family side and applied consistently to all regions of the country.

       “Having drawn down standing inventories to very thin levels over the past year, some home builders are now carefully replenishing their supplies in response to demand from smart buyers who are taking advantage of low interest rates and prices,” said NAHB Chairman Joe Robson.

       “The May report showing three consecutive months of gains in single-family housing starts and two consecutive months of gains in single-family permits is a very welcome sign that the market may be nearing a turning point,” said NAHB Chief Economist David Crowe.

       “That said, our recent surveys tell us that builders remain very cautious about the future, and that they are aware of the upcoming expiration of the first-time buyer tax credit at the end of November,” Crowe added. “Homes that get started now should be able to close by that deadline, and this may be spurring some of the latest construction activity.”

       Single-family housing starts gained 7.5% in May, breaking the 400,000 mark for the first time since November 2008 to reach a seasonally adjusted annual rate of 401,000 units. Meanwhile, starts in the much more volatile multifamily sector posted a 77% gain following a nearly equivalent decline in the previous month, for a seasonally adjusted annual rate of 124,000 units.

       Building permit issuance, which can be an indicator of future building activity, rose 4% overall in May to a seasonally adjusted annual rate of 518,000 units. On the single-family side, permits rose 7.9% to 408,000 units, while on the multifamily side, they declined 8.3% to 110,000 units.

       Both housing starts and permits were up across every region in May. Starts rose 2% in the Northeast, 11.1% in the Midwest, 16.8% in the South and 28.6% in the West.

       The President on June 17, 2009, announced a sweeping financial reform plan that is intended to restore confidence in the integrity of the U.S. and global financial system.

       When unveiling the proposal, the President emphasized that the proposed reforms seek to build a new foundation for financial regulation and supervision that is simpler and more effectively enforced, protect consumers and investors, reward innovation and adapt and evolve with changes in the financial market.

       The plan, which the President wants to complete this year, centers on expanding the power of the Federal Reserve to police large, systemically important institutions and on allowing the government to break firms apart, implement new rules for complex financial instruments and create a new federal agency to oversee consumer products such as mortgages and credit cards.

       The National Association of Home Builders (NAHB) is currently reviewing the far-ranging proposal — which would touch almost every corner of financial markets, from tougher consumer-protection policies to stricter rules over exotic financial products such as credit derivatives.

        The proposed reform also would bring many of the products and companies that previously operated outside of the banking system under federal scrutiny.

         The Administration's blueprint would give the government the power to take over and wind down a large financial company — a power that government officials lacked last year when the financial crisis was intensifying.

         The plan would also give the central bank more power over the payments and settlements systems in U.S. financial markets to prevent a breakdown that officials fear could destabilize the economy.

The plan proposes reforms to meet the following five key objectives:

    * Promote robust supervision and regulation of financial firms
    * Establish comprehensive regulation of financial markets
    * Protect consumers and investors from financial abuse
    * Provide the government with the tools it needs to manage financial crises
    * Raise international regulatory standards and improve international cooperation

       The Administration has not submitted legislative language and significant changes to such a plan will probably be made as it works its way through Congress.

        While the President would like a reform plan to be enacted this year, the congressional agenda is already full and that timing appears unlikely.

        A delay until next year should give the NAHB enough time and ample opportunities to weigh in during the debate.

       Details of the Administration’s proposal are outlined in an 80-plus page white paper. The white paper and fact sheets on the five major components of the plan are posted on the Treasury’s Web site at www.ustreas.gov/news/index1.html.

For more information, e-mail David Ledford at NAHB, or call him at 800-368-5242 x8265.

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