WASHINGTON - Fresh signs that the economy is stabilizing - though at low levels - emerged Tuesday in reports that home construction rose more than expected in May and wholesale prices remain in check.

The building of new homes and apartments jumped 17.2 percent to a seasonally adjusted annual rate of 532,000 units, up from April's record low of 454,000 units, the Commerce Department said. Building permits, an indicator of future activity, rose 4 percent to an annual rate of 518,000 units, also better than expected.

But the gains in construction were driven by a surge in the highly volatile category of multifamily buildings, which soared 61.7 percent in May after plunging 49.4 percent in April. Single-family home construction rose at a much lower rate, 7.5 percent.

Meanwhile, the Producer Price Index, which measures wholesale prices, rose a seasonally adjusted 0.2 percent compared with April, the Labor Department said. That was below analysts' expectations of 0.6 percent.

Despite the increase, wholesale prices fell 5 percent the past 12 months, the largest annual drop in nearly 60 years. Excluding volatile food and energy prices, the core PPI dropped 0.1 percent in May, also below analysts' forecast of 0.1 percent.

Falling prices can raise fears about deflation, but most analysts say efforts by the Federal Reserve to stimulate the economy will prevent that.

The latest government reports, including a seventh straight drop in industrial production, follow a dip in homebuilder confidence reported Monday. Taken together, along with a recent rise in mortgage rates, they depict an economy recovering slowly from the depths of the longest recession since the Great Depression.

"The bottom line is that housing activity appears to have found a floor, albeit at a low level," Paul Dales, U.S. economist at Capital Economics in Toronto, wrote in a research note.