USA Today
WASHINGTON (Reuters) — Warm weather helped housing starts soar 14.5% in January to the highest level in nearly 33 years, as groundbreaking on new single-family houses hit a record, the government said Thursday in a report showing unexpected strength in a market that had begun to slow.
The Commerce Department said January housing starts climbed to a 2.276 million unit annual rate — faster than economists’ forecasts of a 2 million unit pace. December housing starts were revised up to a 1.988 million unit pace from an originally reported 1.933 million unit rate.
January’s pace was the fastest since March 1973, but it was expected to be a blip caused by the weather. Analysts are forecasting that housing construction will slow this year as the nation’s five-year housing boom quiets down.
January’s increase in housing starts from December was the largest monthly percentage gain since March 1994, when starts rose 17%.
New construction of single-family homes increased 12.8% to a record 1.819 million unit pace in January while multifamily housing starts surged 21.9% to a 457,000 unit pace, the Commerce Department said.
Starts rose across the United States, climbing 29.2% in the Northeast, 23.7% in the Midwest, 16.9% in the West and 8.7% in the South.
Permits for future construction, an indicator of builder confidence, posted an unexpected increase, up 6.8% to a 2.217 million unit rate from December’s 2.075 million unit pace. Economists had expected permits to decline to a 2.062 million unit pace.
With mortgage rates rising, the U.S. housing market had begun to show signs of cooling after a five-year rally that shattered sales and construction records and sent house prices up more than 55% nationwide. But in the first three weeks of January, average 30-year fixed-rate mortgage rates dipped, according to data from Freddie Mac.
Those borrowing costs have begun to climb again, and economists continue to forecast a moderate slowdown in housing construction, sales and price appreciation for 2006.
In other economic news:
•The number of Americans filing claims for unemployment benefits rose to 297,000 last week, up 19,000 from the previous week. The increase was larger than economists had been expecting but it still left claims at a level indicating a strong job market.
•The Labor Department said import prices climbed an unexpectedly steep 1.3% in January as the cost of imported petroleum shot up 6.4%, first increase in fourth months.
The rise in import prices, which followed a revised 0.1% December drop, outstripped expectations for a 0.9% gain. But non-petroleum import prices edged up just 0.2% last month.
Export prices rose 0.7%, ahead of the 0.2% gain economists had expected.
The department said crude oil import prices surged 8% in January, bringing their increase over the past 12 months to a hefty 48.2%.
The sharp rise in oil costs the past year has pushed overall import prices up sharply and has heightened inflation worries at the Federal Reserve.