Home-building permits at highest level since 2008

NEW YORK (CNN Money) - Builders appear to be getting more bullish on residential real estate: in May, they applied for permits to build new homes at the highest rate since September 2008, according to a government report issued Tuesday.

The increase in permits to an annual rate of 780,000 in the Census Bureau report mirrors a recent survey of builder confidence, which rose to its highest level since 2007, according to the National Association of Home Builders.

Actual housing starts, however, dropped 4.8% compared with April, although they did gain 28.5% compared with a year earlier.

The housing market has been sending out mixed messages, with home prices still very weak and foreclosures showing signs of picking up after months of decline.

A drop to multi-family housing starts to an annual rate of 179,000 from 217,000 in April accounted for the loss in new construction. Starts of single family homes rose 3.2% month-over-month to a 708,000 annual rate.