US home construction jumps in Jan

Washington: US home building surged in the first month of 2018, with a sharp rise in construction of apartments and as rebuilding continued in the storm-damaged South, according to government data released Friday.

The jump brought the pace of housing construction to a 15-month high, while new building permits, a sign of supply in the pipeline, hit a pre-housing-crisis record, according to the Commerce Department data.

Total housing starts rose 9.7 percent in January to an annual rate of 1.3 million units, the highest level since October 2016 and the largest increase in 13 months, the report said.

That surpassed analyst forecasts, which had called for 1.2 million units.

The increase was driven by a 19.7 percent surge in apartment construction, while single-family homes started rose just 3.7 percent from December.

"The underlying story here is that housing construction is grinding slowly higher, and likely will continue to do so through mid-year, at least," Ian Shepherdson of Pantheon Macroeconomics said in a research note.

"Higher mortgage rates are likely to become a problem later in the year." Lawrence Yun, chief economist of the National Association of Realtors, cheered the data, since the increase in available housing will help hold down home prices and rent.

In addition, "This boost in housing supply not only helps the economy, but may also help the Federal Reserve temper the pace of future short-term rate hikes," Yun said, since rising housing costs can drive inflation.

"Simply put, more housing supply means a lower inflation rate, and potentially a slower pace of interest rate increases by the Fed." However, he noted that housing inventory is currently near historic lows.