RTTNews - Government data released Friday showed that new home building activity picked up again in June, following up on a sharp jump seen in the previous month.

A rise in permits pointed to signs of increased building down the road as well - raising some hope that there is light at the end of the tunnel for the battered home building sector.

Still, many economists remain leery, warning that the last thing the supply-saturated housing market needs is more building.

The U.S. Commerce Department revealed that housing starts rose 3.6 percent to an annual rate of 582,000 units in June from a revised pace of 562,000 in the previous month.

Economists were expecting the figure to remain relatively stable with the pace of 532,000 units that was originally reported for May.

The report also showed that building permits, an indicator of future housing demand, climbed 8.7 percent to an annual pace of 563,000. This compared to the revised May rate of 518,000.

The rise in housing starts followed up on a sharp advance in the previous month. With the revised figures, May's rate was up 17.3 percent from the 479,000-unit pace seen in April.

Housing starts were pushed higher by a jump in single family homes. This part of the market saw a rate of 470,000 units for June, up from a pace of 411,000 units in the previous month.

This offset a drop in starts for multi-family homes. After a sharp rise in May to a rate of 151,000 units, the figure dropped to a pace of 112,000 for June.

The good news is those closest to the industry, i.e. home builders, are seeing signs of increased foot traffic and more favorable selling conditions, spurring optimism and by extension sparking new home building, Lindsey Piegza, economic analyst for FTN Financial, said in a note to clients.

But Piegza remained cautious about conditions in the housing market, warning that it remains fragile with bloated inventories and falling prices.

She noted that the bad news for the industry was that additional housing projects will only add to outstanding inventories and downward price pressure.

The starts data are the latest in a string of housing-related statistics that will be digested in the coming weeks.

On Thursday, a closely-watched survey of home builders showed that confidence is growing in the industry.

The National Association of Home Builders said its Housing Market Index rose to 17 in July from a reading of 15 last month. Credit remains tight in the wake of last year's financial crisis, but lower prices are starting to tempt buyers into the market.

The housing market will remain in focus next week. Next Thursday, the National Association of Realtors will report figures for sales of previously-owned homes in June.

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