US home building surged in May, climbing 21.7% from April, as low inventory in the existing home market continued to boost interest in new homes.

Housing starts, a measure of new home construction, came in far beyond expectations that they would decline by 0.1%, according to data released Tuesday by the Census Bureau.

The number of units rose in May to a seasonally adjusted annual rate of 1.631 million, above expectations for 1.40 million and above the revised April estimate of 1.34 million.

Building permits, which track the number of new housing units granted permits, also rose in May, after dropping in March and April. Permits were up 5.2% from the revised April rate of -1.5%.

A separate survey released on Monday from the National Association of Home Builders revealed that the lack of inventory in the existing home market — as current homeowners hunker down with their ultra-low interest rates — continues to boost home builder sentiment.

The National Association of Home Builders/Wells Fargo Housing Market Index gauges market conditions and looks at current sales, buyer traffic and the outlook for sales of new construction homes over the next six months.

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