US housing starts unexpectedly fall in January

Activity in the US housing sector cooled more than expected at the start of the year.

US housing starts declined by 3.8% month-on-month in January to reach an annualised pace of 1.01m, according to the Department of Commerce.

Economists had pencilled in a rise of 2.0%.

The previous month’s fall was slightly worse than expected, with the government’s statisticians revising down their preliminary estimate from 1.23m starts to 1.20m.

Housing permits - a lead indicator for activity in the sector - fared better, printing at 1.202m, more-or-less in line with forecasts.

Commenting on the data, Chris Copley, Regional Sales Manager at TD Bank, based in Philadelphia, said: "given the volatility in 2015, we remain optimistic about the housing market following an overall upward trajectory while new home sales level out.”

"The dip in starts was broad-based, with near-4% declines in both single and multi-family activity. These data are hopelessly volatile month-to-month, though, and we are much more interested in the permits numbers, where single-family activity dipped and multi-family rose.

"The trend in single-family permits - the most important number in the whole report - is rising, but we expect a significantly better performance in the spring, when the rising trend in mortgage applications should be transmitted into faster increases in construction activity," said Ian Sheperdson, chief economist at Pantheon Macroeconomics.