US housing starts fall sharply The number of groundbreakings on new US homes declined in May, falling nearly 5 per cent from the previous month, underlining the slowdown in the new homebuilding and the housing sector. New home starts, which represent when residential construction actually commences, fell 4.8 per cent in May from April's revised 744,000, data from the commerce department showed on Tuesday. The decline in housing starts during the peak US construction season is worrisome, analysts said, though they are hopeful for a strong remainder of the summer. The number of permits for future construction rose 7.9 per cent in May from the previous month, well above analyst expectations, but permits do not guarantee construction on the planned properties. May's level was the highest in nearly four years, following consistent growth over the past 12 months. "We see a clear pattern of gains in single-family housing starts and permits and the level of permits relative to starts suggests some further gains in the months ahead," John Ryding and Conrad DeQuadros of RDQ Economics said in a note to clients. Our take is that the housing sector is stabilising and that residential construction activity is beginning to pick up at a modest rate. High homebuilder sentiment, which was reported on Monday, shows sector optimism for the vital summer months, when a significant amount of construction occurs. Sentiment was at a five-month high, though there is still concern about the strength of the housing market for completed homes.