Reuters Groundbreaking on U.S. singlefamily homebuilding projects surged in May by the most in more than three decades and permits for future construction also climbed, suggesting the housing market may be turning a corner after getting clobbered by Federal Reserve interest rate hikes.

Still, even with the Fed skipping a rate hike this month for the first time since early 2022, credit conditions remain in the process of tightening, and that could make it challenging for builders heavily reliant on construction and development loans to keep pace with May39;s rebound in the months ahead.

Indeed, economists noted that multifamily construction projects that had secured financing last year contributed to May39;s gains and may level off as the year progresses as new financing becomes harder to obtain.

Housing starts rose to a seasonally adjusted annual rate of 1.631 million units last month from April39;s downwardly revised 1.34 million, the Commerce Department said on Tuesday. May39;s rate was the highest since April 2022, which was then the highest since 2006.

The 291,000unit increase in starts was the most since January 1990, and the 21.7 rise was the largest percentage gain since October 2016.

While housing starts data tend to be volatile and this figure may be revised down in coming months, the enormity of the increase suggests that builders are broadly expanding operations this summer, Nationwide Senior Economist Ben Ayers said in a note.

Starts rose by…