National Mortgage News reports the Commerce Department says housing starts increased 3.5 percent in May, following a 3.4 percent drop for April, to a seasonally adjusted annual rate of 560,000 units.  This figure includes single-family and multi-family units.  Multifamily housing starts alone rose 24 percent over May of 2010, to 134,000 units.  Meanwhile, the confidence index of builders, as measured by the National Association of Home Builders (NAHB), fell three points to its lowest level in nine months.  New building permits increased 8.7 percent to the highest level in six months.