WASHINGTON: Construction of new homes unexpectedly nosedived across the United States in December, hitting its lowest level in more than two years, government data showed on Tuesday (Feb 26).
The Commerce Department data, which were delayed due to the December-January government shutdown, coincided with a sharp drop on Wall Street which economists say could have slowed investment in some sectors.
Despite the slowdown in construction, the numbers in the data on permits also pointed to a possible rebound in the construction of apartments, a volatile category.
Total housing starts fell 11.2 per cent to an annual rate of 1.08 million, seasonally-adjusted, well below what economists had been expecting and the lowest point since September of 2016, according to the Commerce Department.
Starts for single-family homes fell for the fourth straight month.
The number of construction permits issued - a sign of construction in the pipeline - also rose higher than expected to an annual rate of 1.33 million, driven by a sudden jump in building permits for apartments.
Weakness in the housing sector last year prompted concerns for US economic growth in the near term but analysts say demand is expected to recover this year as mortgage prices fall.
The December numbers were also mostly within broad margins of error and officials warn trends may take as much as six months to appear.
Nevertheless, Ian Shepherdson of Pantheon Macroeconomics wrote Tuesday the December numbers were "grim" but were unlikely to deteriorate further.
Wall Street's rout in December "clearly scared homebuilders, so the rebound in the market this year ought to be followed by a rebound in construction activity over the next couple of months."