Like much of the economic data released in recent months, the Commerce Department’s Wednesday report on U.S. homebuilding gave a picture of an improving, but still incomplete, recovery.
For the month of January, housing starts fell by 8.5 percent to a seasonally adjusted rate of 890,000. Comparing this figure to both the previous month’s numbers and those of last January show that the housing recovery still faces some obstacles. In December, homebuilders began construction on 973,000 new homes, while in January of 2012, new-home construction was up 23.6 percent. Economists were not overly optimistic ahead of the report, but they had been predicting slightly better results. A decrease in housing starts of 3.1 percent was set as their consensus estimate, according to a survey conducted by Dow Jones Newswires.
However, there were signs of growth. Construction of single-family homes, a segment of homebuilding that represented approximately two-thirds of all new housing starts last month, increased 0.8 percent to a rate of 613,000 units, a gain of 20 percent from a year earlier. In addition, the construction of single-family homes was at its highest level since the financial crisis began.
The single-family home construction figures provided a sign that the housing market is improving, as did the increase in the number of new building permits. The number of new permits, an indication of future construction, jumped 1.8 percent to an annualized level of 925,000 last month. This is the highest level reached since June 2008, and it surpassed analysts expectations for a rate of 920,000…
The housing market has been pegged by economists as a bright spot in the U.S. economy and an important driver of growth. Last month, the Commerce Department stated, according to The Wall Street Journal, that spending on home construction and home improvements contributed to economic growth in each of the past seven consecutive quarters. Yet, housing starts remain below historic levels; last year construction began only 780,000 homes. This year, the United States is on pace for modestly higher annual results.
Some areas of the country reported extremely divergent results; housing starts dropped 35.3 percent in the Northeast and 50 percent in the Midwest, while the West saw an increase of 16.7 percent and the South experienced a 4.1 percent gain.
Luxury home builder Toll Brothers (NYSE:TOL) capitalized on these gains in the housing market, swinging to a profit for the quarter ended January 31. However the company, which is largest builder of luxury single-family homes in the United States, missed Wall Street’s expectations with the results reported on Wednesday.
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