WASHINGTON – U.S. housing starts soared 14.5 percent in January to the highest level in nearly 33 years, as groundbreaking on new single-family houses hit a record, the government said on 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 Wall Street economists' forecasts of a 2.0 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 increase was the largest monthly percentage gain since March 1994, when starts rose 17.0 percent.
New construction of single-family homes increased 12.8 percent to a record 1.819 million unit pace in January while multifamily housing starts surged 21.9 percent to a 457,000 unit pace, the Commerce Department said.
Starts rose across the United States, climbing 29.2 percent in the Northeast, 23.7 percent in the Midwest, 16.9 percent in the West and 8.7 percent in the South.
Permits for future construction, an indicator of builder confidence, posted an unexpected increase, up 6.8 percent 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 percent 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.