U.S. housing starts jump

U.S. housing construction — an important indicator of the strength of the economic recovery — rose to a 16-month high in March, the Commerce Department reported Friday.

But single-family home building fell.

Single-family homes are the most important segment of the market because it was dodgy mortgage debt that triggered the recession. Economists are looking for a recovery in the sector as proof that the economy is on the rebound.

They are also concerned that rising interest rates and the end of federal government homebuyer tax credits will create a further drag on housing activity.

The Commerce Department said construction rose 1.6 per cent to a seasonally adjusted annual rate of 626,000 last month. Economists polled by Thomson Reuters had forecast construction would rise to 610,000 units.

Single-family home starts fell by 0.9 per cent to an annual rate of 531,000 units. In February, they had risen by 5.7 per cent.

Multi-family construction — which tends to be more volatile — soared 18.8 per cent to 95,000 after falling 21.6 per cent the prior month.

Applications for building permits, considered a good gauge of future activity, rose to an annual rate of 685,000. Economists were expecting applications to rise to 630,000.