Permits for future home construction climbed to a near eight-year high in May, which sets the stage for greater inventories from homebuilders in the months ahead.

Read more: Builders Upbeat from More 'Committed' Buyers

Building permits surged 11.8 percent to a seasonally adjusted annual pace of 1.28 million units, the highest since August 2007, the Commerce Department reports. This marks the second consecutive month of increases in housing permits, which have been above a 1 million-unit pace since July.

"Residential construction has been the laggard in this [housing] recovery and the moon shot surge in new permits today means the final piece of the recovery puzzle is now falling into place," Chris Rupkey, chief financial economist at MUFG Union Bank in New York, told Reuters.

While the future signs look bright, groundbreaking on new homes posted a drop in May, plunging 11.1 percent to a 1.04 million-unit rate. However, that follows a strong April, where housing starts were at a revised rate of 1.17 million, the highest since November 2007, the Commerce Department reports.

Jonathan Smoke, chief economist at®, blames the rain for the slowdown last month in homebuilding. May’s record rainfall across the country made it difficult to begin construction on new homes, Smoke notes.

“As Milli Vanilli once crooned: Blame it on the rain,” Smoke says. “You can easily pull a permit in the rain, but it’s a bit harder to break ground and start construction.”

Housing permits are up 25 percent year-over-year, Smoke says. Regionally, housing permits in the Northeast increased to the highest level since March 1987, while in the Midwest, permits neared a one-year high in May. Permits, however, dropped in the South and West.

With job growth increasing and incomes rising, Americans are increasingly finding themselves in a better position to buy a home, Smoke says.

Source: “U.S. Building Permits Near 8-Year High; Starts Pull Back,” Reuters (June 16, 2015) and “Blame it on the Rain: Housing Starts Were Way Down in May – But Permits Hit an 8-Year Record,” Reuters (June 16, 2015)