us housing starts in may saw the highest increase since 2016 along with an uptick in applications to build indicating a rejuvenation of residential construction what happened data issued by the federal reserve of st louis showed a 217 jump in the initiation of home construction reaching an annualized rate of 163 million the spike includes an 185 increase in singlefamily homebuilding coupled with an upward trend in the commencement of apartment buildings and other multifamily projects correspondingly applications to build often considered a harbinger of future construction rose by 52 to an annualized rate of 149 million units reflecting a particular increase in permits for onefamily dwellings the uptick seen in construction was triggered by several factors including strengthening demand receding material costs and easing supplychain pressures according to a bloomberg report however the upward trend in mortgage rates threatens affordability according to the report implying that the renewed momentum in housing demand might be limited simultaneously completed homes rose to a 152 million annualized rate while the volume of onefamily properties under construction remained fairly stable at 695000 read also cheaper to buy a home rather than rent not anymore peter essele head of portfolio management for commonwealth financial network said the substantial upswing in housing starts particularly in oneunit structures hints at an acceleration in new home construction with the change largely attributed to the drop in lumber costs which coupled with rising home prices is motivating builders to ramp up construction on a similar note jeffrey roach chief economist for lpl financial said the current focus should be on the levels of housing activity rather than the rates of change roach said the rising permits for singlefamily homes may indicate a bottomingout of the market for new singlefamily homes although the market for existing homes might remain high due to the low supply roach also mentioned that the growing demand for condos and apartments among millennials will bolster construction activity in the coming months moving forward further data on existinghome sales for april will be issued on thursday while a report on newhome purchases is due next week homebuilder stocks set to benefit the optimism in the residential construction market could offer lucrative opportunities for leading homebuilders dr horton inc dhi a major player in the market could benefit substantially from the rise in housing starts and building permit applications a similar potential is evident for pultegroup inc phm another significant homebuilder particularly if the uptrend in onefamily dwelling permits continues lennar corporation len has already been surpassing expectations and could continue to thrive especially with the anticipated demand for condos and apartments among millennials read next despite housing market jitters paint giant is set to deliver analyst