The pace of housing starts and building permits declined in January, according to the latest data from the Census Bureau.
Housing starts fell 3.8% to an annualized pace of 1.099 million homes.
This was a big miss as economists were expecting them to rise by 2.0% to an annualized pace of 1.173 million homes.
Meanwhile, building permits fell 0.2% to an annualized pace of 1.202 million.
They were expected to fall by 0.3% to an annualized pace of 1.2 million.
“The overall tone of this report was disappointing, and it points to some further weakening in housing sector momentum. In fact, the weak showing in construction activity is broadly consistent with the recent souring in homebuilders’ sentiment, and when combined with the downdrift in permit approvals it suggests some slowdown in the months ahead,” wrote TD Securities’ deputy chief US macro strategist Millan L. B. Mulraine.
“From a GDP accounting perspective, the disappointing start to construction activity this quarter along with the soft hand-off from Q4 points to a weaker lift from residential investment in Q1. Nevertheless, we continue to expect GDP growth to rebound this quarter to around 2.0% q/q,” he added.
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