WASHINGTON – The pace of U.S. home construction fell 14.3 percent in January, the sharpest drop since October that bucked two months of increases and that was much worse than economists had expected, a government report on Friday showed.
The Commerce Department said housing starts clocked an annual pace of 1.408 million units in January compared to 1.643 million units in December. Economists had forecast January housing starts to fall to a 1.60 million unit pace from December's originally reported pace of 1.642 million units.
Building permits, which offer a clue to future construction plans, fell 2.8 percent to a 1.568 million unit pace. Economists were expecting building permits would register a 1.593 million unit pace, down from the revised 1.613 million unit pace of December.
Despite the gloomy data, a survey of builders' confidence issued this week showed an up tick for February.
A private survey of homebuilders' sentiment rose in February to its highest level since June 2006. The National Association of Homebuilders/Wells Fargo Housing Market Index jumped to 40 in February from 35 the previous month. Economists had predicted the index to remain unchanged. Readings below 50 indicate more builders view market conditions as poor rather than favorable.