Housing starts climb 1.5 percent in January, surpass expectations

Construction on new homes exceeded expectations in January, offering further signs of a recovery in both the housing and construction sectors, according to data released Thursday by the U.S. Commerce Department.

Housing starts climbed 1.5 percent last month to reach a seasonally adjusted annual rate of 699,000, compared to 689,000 in December. The median estimate in a Bloomberg survey of economists was 675,000.

However, construction on single-family homes fell by 1 percent last month, although a major increase in volatile apartment construction helped offset this decline. December's single-family home starts were revised upward to mark a 12 percent surge from November.

Finally, building permits - often a sign of future construction activity - also increased by 0.7 percent.

"The upturn in permits and starts in recent months has been consistent with the surge in the .. survey of homebuilders, which has surprised the markets to the upside for five straight months," Ian Shepherdson, chief economist at High Frequency Economics, told The Associated Press. "Builders seem confident that if they build, buyers will come."