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Housing Starts in U.S. Drop to Lowest Level in Three Months

Posted on Feb 17, 2016

From Bloomberg:

New-home construction in the U.S. unexpectedly cooled in January, indicating there is a limit to how much gains in residential real estate will boost growth at the start of 2016.

Housing starts dropped 3.8 percent to a 1.1 million annualized rate, the weakest in three months, from a 1.14 million pace the prior month, a Commerce Department report showed Wednesday in Washington. The median forecast of 76 economists surveyed by Bloomberg was 1.17 million. Permits, a proxy for future construction, were little changed.

While all four regions of the U.S. saw a decline in construction, a crippling East Coast winter storm probably deepened the setback at the end of the month. A strengthening job market is projected to buoy housing demand this year, helping offset still-tight credit standards for some prospective buyers and turmoil in financial markets.

“We had a mild November and December, and there’s just a little bit of payback in January,” said Gus Faucher, an economist at PNC Financial Services Group Inc. in Pittsburgh, whose forecast tied for the closest in the Bloomberg survey. “I do expect to see growth in housing starts over the course of the year.”

Another report Wednesday showed wholesale prices unexpectedly rose 0.1 percent in January from the prior month as higher food costs more than offset the plunge in energy. Producer prices climbed 0.1 percent after falling 0.2 percent in December, according to figures from the Labor Department.

See survey results here: