It was another sign that the economy has regained some momentum after a harsh winter and that the modest housing recovery is still alive.

Higher rates could clobber the nascent housing recovery.

"That's not enough to strangle the housing recovery," he said.

Few analysts felt that the housing recovery was in danger of faltering.

The figures, released by the Department of Environment, support optimism among mortgage lenders that a housing recovery is under way.

For all this progress, however, it is important to recognize that the housing recovery remains quite fragile.

New-home sales fell 3.3 percent in May, raising questions about the strength of the housing recovery.

Proponents feel that since a housing recovery is not on the immedate horizon, the program, if continued, would receive a more favorable reception.

"Although national housing starts and existing home sales are anemic, the regional housing recovery has been comparatively robust."

It was a second straight declining month, further evidence of a bumpy housing recovery.