The IHS Markit/CIPS UK Construction Purchasing Managers’ Index posted a figure of 56 in May, up sharply from the 53.1 recorded in April.
The housing sub-category rebounded strongly after slumping to a seven-month low in March, while residential building increased at its fastest rate since December 2015.
James Bloom, managing director of development finance at Masthaven, said: “This is very positive news, combined with official statistics indicating house prices are shifting down a gear.
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“The continued very low interest rate environment combined with strong levels of demand have helped to boost the number of new home starts.”
Data showed a rise in civil engineering and commercial building activity, however, commercial development remained the weakest performing sub-category.
New business intakes in May increased at the fastest rate of expansion seen so far in 2017.
James continued: “Access to funding remains a key issue, and I think the emergence of new and disruptive specialist banks is starting to have a real effect on the industry.
“They are easing the pressure on the SME housebuilder by providing access to funding, which is really helping to get the wheels of the housebuilding market moving.”