Single-family housing starts unexpectedly rose 2.1% in May even though builders are taking an increasingly negative view of market conditions.The U.S. Census Bureau reported that SF starts increased from a record seasonally adjusted annual rate of 1.54 million in April to 1.59 million in May. So far, SF starts are down only 2.1% compared to the first five months of 2005, but that doesn't show the extent of the slowdown, according to National Association of Home Builders economist Michael Carliner. "It is not falling off a cliff, but it is falling more sharply than we anticipated," Mr. Carliner said. NAHB is forecasting that SF starts will be off 9% from last year's record 1.72 million pace. One month ago, NAHB economists expected a 7% decline. The downward revision in starts reflects a pickup in contract cancellations by new homebuyers, which is eating into the large backlog of builders' unfilled orders.

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