Housing Starts Rise to Highest in Six Months

By JEFF BATER, LUCA DI LEO And JUDITH BURNS

WASHINGTON—Home construction rose in January as builders recovered from a bout of bad weather, but an indicator of future groundbreakings fell, in another sign the housing recovery will be slow.



A separate government report showed, U.S. import prices rose for the sixth-straight month and more than expected in January, largely due to a sharp increase in volatile oil prices.



Housing starts climbed 2.8% to a seasonally adjusted 591,000 annual rate compared to the prior month, the Commerce Department said Wednesday. Single-family groundbreakings and apartment construction both rose.



Economists surveyed by Dow Jones Newswires forecast a 5.9% increase in January housing starts, to an annual rate of 590,000. The pace of 591,000 was the strongest since July 2009.



Starts have gone up three times in the last six months.



December starts were revised up, falling 0.7% instead of 4.0% as reported originally. Bad weather slowed builders that month; building permits had surged.



"As always in the winter months, poor weather conditions could delay the transition of permits to starts," Barclay's Capital said in a research note issued before Wednesday's starts report. "We expect a bit more softness in single-family starts over the next few months, followed by a jump higher in the spring as new-home sales turn up."



There has been improvement in the housing sector. Year over year, housing starts in the U.S. last month were 21.1% lower than the pace of construction in January 2009, which was the pit of the recession.



The National Association of Home Builders on Tuesday reported U.S. homebuilder confidence grew in February from a seven-month low. The NAHB said its housing market index climbed two points, to 17.



Still, the level signaled lingering worry in the housing sector. Difficulty getting credit and high joblessness are discouraging some buying, blunting the positive effects of a tax incentive for first-time buyers and low interest rates.



"Buyers aren't exactly beating down their doors," Weiss Research analyst Mike Larson said in reaction to the NAHB report on builders. "Indeed, traffic through models and sales offices is nowhere near what builders would like to see."



Wednesday's data said building permits in January tumbled 4.9% to a 621,000 annual rate. Economists had expected permits to stumble by 3.1% to a rate of 633,000. December permits leaped by 10.9% to 653,000. Building permits are a sign of future construction.



January single-family housing starts compared to the prior month rose 1.5%, to 484,000.



Apartment construction—housing with two or more units—rose 9.2%, to 107,000. Within that multi-family category, groundbreakings of homes with five or more units were 17.6% higher.



Regionally, housing starts last month climbed 1.0% in the South, 10.0% in the Northeast, and 8.9% in the West. Construction fell 3.2% in the Midwest.