Work begins on most single-family homes in four years
Builders broke ground in January on the most U.S. single-family homes in more than four years and permits for future construction rose, an indication the industry's momentum carried over into 2013.
Work began on 613,000 one-family houses at an annual rate last month, the most since July 2008 and up 0.8 percent from December's 608,000, Commerce Department figures showed Wednesday in Washington. Total housing starts dropped to a 890,000 rate, less than forecast and restrained by a slump in construction of multifamily units, which is often volatile.
Faster hiring and easier access to credit are needed to help complement historically low mortgage rates and stoke a sustained real-estate rebound. Rising sales at builders such as PulteGroup Inc. and Miami-based Lennar Corp. indicate housing will keep contributing to growth this year after emerging as a bright spot in the economy in 2012.
"The fact that single-family starts are up is very encouraging, it is more important to the economy in terms of employment and growth" than the multifamily area, said Gus Faucher, a senior economist at PNC Financial Services Group Inc. in Pittsburg, who projected total starts would drop to a 895,000 pace. "The housing market recovery is continuing and will be an important contributor to economic growth. Permits look very solid, and that is a great sign."
Wholesale prices in the U.S. rose in January for the first time in four months, reflecting higher costs for food and pharmaceuticals, another report showed. The producer-price index climbed 0.2 percent after a 0.3 percent drop in December, the Labor Department reported.
Stock-index futures held earlier losses after the reports. The median estimate of 85 economists surveyed by Bloomberg projected total housing starts would drop to a 920,000 annual rate. Estimates ranged from 870,000 to 1 million. The prior month's figure was revised up to 973,000, the most since June 2008, from a previously reported 954,000 pace.
Permits increased to a 925,000 annual rate, the most since June 2008. They were projected to climb to a 920,000 annual rate, according to the survey median. Applications that are higher than the level of starts signal residential construction may strengthen.
"The drop in starts reflects a correction from the strength we saw earlier," Sean Incremona, a senior economist at 4Cast Inc. in New York, said before the report. 4Cast was the best forecaster for home building starts over the past two years, according to data compiled by Bloomberg.
Work on multi-family homes, such as apartment buildings, plunged 24.1 percent to an annual rate of 277,000.
The drop in total starts reflected declines in two of four regions. Construction dropped 50 percent in the Midwest and 35.3 percent in the Northeast. It rose 16.7 percent in the West and 4.1 percent in the South.