A government report is expected to show that new home construction rose in May from a record low a month earlier, while building permits increased slightly.
The Commerce Department's report is expected to show that construction of new homes and apartments rose to a seasonally adjusted annual rate of 490,000 units last month from 458,000 units in April, according to Wall Street economists surveyed by Thomson Reuters.
Applications for building permits, considered a reliable sign of future activity, are projected to inch upward to a rate of 500,000 units, from 498,000 in April.
The report is scheduled to be released Tuesday at 8:30 a.m. EDT.
Meanwhile, the National Association of Home Builders said Monday its housing market index slipped by one point in June, reflecting many builders' uncertainty about when their business prospects might improve.
The Washington-based trade association said the index fell to 15. It was the first decline since January, when the index dropped to a record low of 8.
The report is "proof that the rise in U.S. mortgage rates lately is dampening activity," Jennifer Lee, an economist with BMO Capital Markets, wrote in a research note.
Earlier this month, major builders Toll Brothers Inc. and Hovnanian Enterprises Inc. reported smaller quarterly losses, rosier sales trends and more prospective buyers visiting model homes. Industry executives, however, say the recession and fear of job losses are keeping many would-be homebuyers on the fence.
Though April's home construction results were the worst on record going back a half-century, the month's weakness came in the volatile multifamily part of construction. By contrast, single-family construction and permits both rose, which economists took as a hopeful sign that this bigger sector of home construction was stabilizing.
Many economists say home construction likely will stop falling in the current quarter. But any rebound isn't expected to take hold until next spring, and even then is likely to be slow due to the huge overhang of unsold homes, a wave of mortgage foreclosures and persistent job losses.
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