US home-building fell more than expected in December, recording its biggest drop in just over a year, amid a steep decline in the construction of single-family housing units following two months of hefty gains.
Other data yesterday showed the number of Americans filing for unemployment benefits dropped to a 45-year low last week.
The decline in claims for jobless benefits, however, probably exaggerated the health of the labour market as data for seven states, including California, were estimated.
Housing starts decreased 8.2% to a seasonally adjusted annual rate of 1.192mn units, the Commerce Department said.
November’s sales pace was revised up to 1.299mn units from the previously reported 1.297mn units.
The percentage drop for housing starts in December was the largest since November 2016.
Economists polled by Reuters had forecast housing starts decreasing to a pace of 1.275mn units last month.
US financial markets were little moved by the data.
Home-building increased 2.4% to 1.202mn units in 2017, the highest level since 2007.
December’s moderation in home-building is likely to be temporary amid strong demand for housing that is being driven by a robust labour market.
Builders, however, continue to struggle with labour and land shortages as well as more expensive lumber.
A survey on Wednesday showed confidence among homebuilders slipping from an 18-year high in January.
Builders expected a dip in buyer traffic and sales over the next six months.
Last month, single-family home-building, which accounts for the largest share of the housing market, tumbled 11.8% to a rate of 836,000 units as construction fell in the South, the Northeast and Midwest.
Home-building was unchanged in the West.
Starts for the volatile multi-family housing segment rose 1.4% to a rate of 356,000 units.
While building permits edged down 0.1% to a rate of 1.302mn units in December, they outpaced starts.
That suggests home-building will rebound in the coming months.
Building permits increased 4.7% to 1.263mn units in 2017, also the highest level since 2007.
Single-family home permits advanced 1.8% in December, while permits for the construction of multi-family homes fell 3.9%.
In a separate report on Thursday, the Labour Department said initial claims for state unemployment benefits dropped 41,000 to a seasonally adjusted 220,000 for the week ended January 13, the lowest level since February 1973.
Economists had forecast claims falling to 250,000 in the latest week.
Claims had increased over the previous four weeks, with economists blaming difficulties adjusting the data for seasonal fluctuations around moving holidays and unseasonably cold weather.
The Labour Department said claims for California, Arkansas, Kentucky, Maine, Hawaii, Virginia and Wyoming were estimated.
Government offices were closed on Monday for the Martin Luther King holiday.
It also said claims-taking procedures continued to be disrupted in the Virgin Islands months after they were battered by Hurricanes Irma and Maria, while claims processing in Puerto Rico was still not back to normal.
Last week marked the 150th straight week that claims remained below the 300,000 threshold, which is associated with a strong labour market.
That is the longest such stretch since 1970, when the labour market was much smaller.
The labor market is near full employment, with the jobless rate at a 17-year low of 4.1%. Last week, the four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 6,250 to 244,500.
The claims data covered the survey week for January’s non-farm payrolls.
The four-week average of claims rose 8,500 between the December and January survey periods, suggesting some moderation in the pace of job growth.
Non-farm payrolls increased by 148,000 in December after surging by 252,000 in November.
Job growth is slowing as the labour market nears full employment.
There has been an increase in companies reporting difficulties finding qualified workers.
There are about 5.9mn job openings in the country.
In its Beige Book report of anecdotal information on business activity collected from contacts nationwide, the Federal Reserve said on Wednesday that “most districts cited on-going labor market tightness and challenges finding qualified workers across skills and sectors.”
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