U.S. single-family home starts rose to its strongest level in over 6 ½ years in December while permits rose, indicating the weak housing market is on the road to recovery.
The housing market has lagged other sectors of economy, which have been posting impressive growth, but Wednesday’s data indicated that activity is picking up. This is good news to the U.S. economy, which is struggling to expand amidst weak global growth.
“The last piece of the economic puzzle is starting to come together now as housing construction is coming back. The housing market is continuing to heal,” Chris Rupkey, a New York-based chief financial economist at MUFG Union Bank, told Reuters.
The U.S. Commerce Department announced on Wednesday that starts for single-family homes, which account for the biggest portion of the market, rose 7.2 percent to an average of 728,000 units, the most since March 2008. This helped erase the 0.8 percent decline in starts for the unpredictable multi-family homes category, pushing total housing groundbreakings 4.4 percent to 1.09 million-unit pace in December. The Wall Street had expected groundbreakings to increase to 1.04 million-unit rate.
Last year, the housing starts rose 8.8 percent to 1.01 million units, the most since 2007. Single-family housing groundbreakings also touched the strongest level in seven years.
Though the total permits for future house building plunged 1.9 percent last month, they were affected by 11.8 percent decline in permits for multi-family category.
Single-family permits increased 4.5 percent to their strongest level since January 2008, as permits in the more populous South touched their strongest level since February 2008. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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