Nationwide housing starts rebounded in May from record lows in the previous month, posting a 17.2 percent gain to a seasonally adjusted annual rate of 532,000 units, according to U.S. Commerce Department figures. While driven largely by a double-digit gain in the volatile multifamily sector, the uptick also reflected a substantial gain on the single-family side and applied consistently to all regions of the country.

“Having drawn down standing inventories to very thin levels over the past year, some home builders are now carefully replenishing their supplies in response to demand from smart buyers who are taking advantage of low interest rates and prices,” said Joe Robson, chairman of the National Association of Home Builders (NAHB).

Single-family housing starts gained 7.5 percent in May, breaking the 400,000 mark for the first time since November 2008 to reach a seasonally adjusted annual rate of 401,000 units. Meanwhile, starts in the much more volatile multifamily sector posted a 77 percent gain following a nearly equivalent decline in the previous month, for a seasonally adjusted annual rate of 124,000 units.

All this is despite the fact that sales of newly built, single-family homes in May held virtually even with the previous month, declining less than one percentage point to a seasonally adjusted annual rate of 342,000 units, as also reported by the Commerce Department.

“In the midst of the prime home-buying season, builders report that a number of factors are limiting new-home sales. These include consumer concerns about job security, potential buyers’ inability to sell their existing homes, and problems with appraisals coming in too low,” Robson said. “The latter issue is directly related to the use of distressed properties (foreclosures and short sales) as comps, which disproportionately impacts assessed values of nearby homes.”

“The good news is that, even as the sales pace leveled in May, inventories of unsold new homes continued to shrink for a 25th consecutive month—a trend that is helping bring supply and demand into better alignment [setting] the stage for an eventual market recovery,” said David Crowe, NAHB chief economist.

New-home sales declined 0.6 percent to a seasonally adjusted annual pace of 342,000 units in May. Meanwhile, the number of new homes for sale fell 2.3 percent to 292,000, which is a 10.2-month supply at the current sales pace.

These figures pose an uncertain view for the future. The increase in housing starts shows homebuilders are optimistic, but sales in May didn’t indicate homebuyers are taking action. The combination of these two factors could prove to worsen the situation, if the homes that were started in May are not sold.