"We ended 2012 on a solid note and we do have some momentum heading into this year"
- Gus Faucher, a senior economist at PNC Financial Services Group Inc.
Led lower by apartments, construction of new homes in the world's largest economy fell sharply in January, while the number of permits for future home building soared to the highest level since July 2008. The U.S. Department of Commerce reported that construction of new U.S. homes tumbled by 8.5% last month to a seasonally adjusted annual rate of 890,000, dragged down by a sharp drop in the volatile multi-family unit category. The report also showed that builders broke ground on 613,000 houses at an annualized rate last month, 0.8% higher than in the previous month. In a longer term, starts have increased 24% from a year ago, but remain below a bubble peak of almost 2.3 million in 2006. Still, the latest data are pointing at the improvement in the property market, which together with the labour market are considered by the Fed to be the most important indicators of economic health.
"We ended 2012 on a solid note and we do have some momentum heading into this year," said Gus Faucher, a senior economist at PNC Financial Services Group Inc. in Pittsburgh, who projected total starts would drop to an 895,000 pace. "The fact that single-family starts are up is very encouraging. It is more important to the economy in terms of employment and growth."
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