Single-family housing production increased for a third consecutive month and builders pulled more permits for both single- and multifamily construction in May, according to newly released figures from HUD and the U.S. Census Bureau. The data reveals that the seasonally adjusted annual rate of single-family housing starts rose 3.2 percent to 516,000 units - the best pace since December 2011.

"Today's report is a good sign that builders are cautiously moving to replenish their depleted inventories of single-family homes in response to increasing buyer demand," said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla.

"The latest data provides evidence of the kind of slow but steady growth that we expect to see in housing production through the end of the year, and shows that housing continues to regain strength regardless of some weakening in other parts of the economy," added NAHB Chief Economist David Crowe. "Particularly encouraging are the gains in permit issuance posted in both the single-family and multifamily sectors in May, which are indicative of builders' intentions to start new projects in the coming months."

While overall housing starts posted a 4.8 percent decline to a seasonally adjusted annual rate of 708,000 units in May, all of the decrease was on the more volatile multifamily side. Single-family starts rose 3.2 percent to 516,000 units as multifamily starts declined 21.3 percent to 192,000 units.

Regionally, dips on the multifamily side drove down combined housing starts in all but the West, which registered a 14.4 percent gain. The Northeast, Midwest and South posted declines in total housing starts of 20.3 percent, 13.3 percent and 6.1 percent, respectively.

However, strong gains in new permitting activity for both single-family and multifamily homes drove the combined permitting number for May up 7.9 percent to a seasonally adjusted annual rate of 780,000 units - the strongest pace since September 2008. Single-family permits were up 4.0 percent to 494,000 units (best pace since March of 2010) while multifamily permits gained 15.3 percent to 286,000 units.

Three out of four regions posted gains in combined permit activity in May. The Midwest, South and West posted gains of 6.1 percent, 11.1 percent and 10.5 percent, respectively, while the Northeast registered an 8.0 percent decline.