Housing starts surged an unexpectedly large 11.6% in May, the biggest percentage rise in almost seven years and a reversal of two straight months of falls, the Commerce Department announced today.

Ground breaking for new homes jumped to a seasonally adjusted 1.733 million annual rate from a downwardly revised 1.553 million rate in April, the biggest climb since July 1995, the Commerce Department said. Single family starts--the largest category of activity--jumped 9.6%, an increase also not matched since July 1995. Starts beat the expectations of some analysts, according to Reuters, who had forecast a 1.599 million rate.

Permits, an indicator of builder confidence in future activity, rose 2.6%. Regionally, starts climbed 6% in the South, the busiest home-building region, and 10% in the West, the next-most-active part of the country for construction. New home building rocketed 24% in the Midwest and 22.4% in the Northeast.