Official figures show that US housing starts rebounded more strongly than expected to their highest level in six months in January.
The Commerce Department said housing starts increased 2.8% to a seasonally adjusted annual rate of 591,000 units, reversing the previous month's drop, which was linked to bad weather. Analysts had expected housing starts to rise to 580,000 units.
December's housing starts were revised upwards to 575,000 units from the previously reported 557,000 units. Compared with January last year, starts surged 21.1%, the largest increase since April 2004.
Housing, which is at the core of the most painful US economic downturn since the Great Depression, is crawling out of a three-year slump, supported by government programmes. New home construction contributed to economic growth in the third quarter of 2009 for the first time since 2005.
But activity slowed sharply in the fourth quarter and while homebuilder sentiment edged up this month, it remains at levels consistent with poor conditions.
Even with mortgage rates near record low, demand for home loans remains lethargic. Mortgage applications dipped 2.1% last week, the Mortgage Bankers Association said in a separate report.
New building permits, which give a sense of future home construction, fell 4.9% to 621,000 units last month after rising to a 14-month high of 653,000 units in December, the Commerce Department said. That compared to analysts' forecasts for 620,000 units.
The inventory of total houses under construction fell 2.3% to a record low 503,000 units last month.
Separate figures from the US Federal Reserve showed that US industrial production jumped higher than expected in January on the back of increased activity in manufacturing, utilities and mining.
The 0.9% rise in the first month of the year followed a revised gain of 0.7% in December, the Fed said. It was also higher than the 0.7% expected by most analysts and the seventh consecutive rise in output.
A separate report from the Labor Department showed import prices rose 1.4% in January, led by a jump in prices for natural gas and other fuels. Export prices gained 0.8% in January.
