Last month, the NAHB reported a surge in confidence among home builders, and according to data released today by the Department of Commerce, that optimism manifested itself in far more than just hopeful thinking: May was a busy month for the single-family, new-home industry—or at least busier than it has been in years.

Building permits for privately owned homes were up 7.9% from April and up 25.0% from May 2011 for a seasonally adjusted annual rate of 780,000. Single-family permits were up 4.0% and 19.9% on a monthly and yearly basis, respectively. Multifamily permits rose 15.3% for an annual rate of 286,000.

While housing starts were down for the month—dropping 4.8% from April to a seasonally adjusted annual rate of 708,000—the decline came from a 21.3% drop in the volatile multifamily sector, which is prone to large swings. On an annual basis, starts remained 28.5% higher. Single-family starts were up 3.2% for the month and were 26.2% stronger year-over-year.

The slowdown in starts may partly be payback for gains made earlier in the year due to unseasonably good weather, said Patrick Newport, U.S. economist at IHS Global Insight, adding that permits numbers indicate that the industry can expect to see housing starts for both single- and multifamily continue to move upward in coming months.

Overall, "the housing market is back on track," Newport said in a statement today, but added that "the level [of starts] shows that we have far to go . … We are not expecting housing starts to climb above the 1.6 million mark until 2016."

See the Commerce Department’s full starts and permits report for May.

Claire Easley is senior editor, online, at Builder.

Learn more about markets featured in this article: Greenville, SC.