Cold weather chills US housing starts; jobless claims tumble
WASHINGTON: US homebuilding fell more than expected in December, recording its biggest drop in just over a year, likely as unseasonably cold weather at the end of the month disrupted the construction of singlefamily housing units.
The steep drop in groundbreaking activity probably will be temporary against the backdrop of a tightening labour market. Other data on Thursday showed the number of Americans filing for unemployment benefits dropped to a 45-year low last week.
“Housing starts were held down by the cold winter weather but should bounce back quickly in coming months as the country warms up from this recent cold spell,” said Chris Rupkey, chief economist at MUFG in New York.
Housing starts decreased 8.2 per cent to a seasonally adjusted annual rate of 1.192 million units last month, the Commerce Department said. November’s sales pace was revised up to 1.299 million units from the previously reported 1.297 million units.
The percentage drop for housing starts in December was the largest since November 2016. Economists polled by Reuters had forecast housing starts declining to a pace of 1.275 million units last month. Homebuilding increased 2.4 per cent to 1.202 million units in 2017, the highest level since 2007.
Building permits edged down 0.1 per cent to a rate of 1.302 million units in December, outpacing starts, which suggests a rebound in groundbreaking in the coming months. Building permits increased 4.7 per cent to 1.263 million units in 2017, also the highest level since 2007.
The PHLX housing index was trading higher after the data, outperforming a weaker US stock market. Shares of Lennar Corp rose 0.4 per cent and those of PulteGroup gained 1 per cent. But shares of D.R. Horton, the nation’s largest homebuilder, fell 1.2 per cent. The dollar was little changed against a basket of currencies and prices of US Treasuries were trading lower. Last month, single-family homebuilding, which accounts for the largest share of the housing market, tumbled 11.8 per cent to a rate of 836,000 units as construction fell in the South, the Northeast and Midwest regions. Homebuilding was unchanged in the West.
Single-family home permits advanced 1.8 per cent in December to their highest level since August 2007, suggesting an acceleration in groundbreaking on that segment of the housing sector was likely. Starts for the volatile multi-family segment rose 1.4 pc to a rate of 356,000 units.