Housing starts near 33-year high

Construction of homes in the United States soared in January to the highest in nearly 33 years thanks to mild winter weather, the government said on Thursday in a report showing unexpected strength in housing.

Separate reports showed import prices surged and jobless claims climbed more than expected.

The housing data initially pushed Treasury prices lower, but analysts chalked the robust construction numbers up to unusually clement weather in much of the country.

January's spike was unlikely to change expectations that the Federal Reserve will tighten rates in March, they said.

"It looks like warm weather had a big impact so the big jump in January housing starts can be attributed to that," said Patrick Fearon, senior economist at A.G. Edwards & Sons in St. Louis. "However, the moderating trend in housing really is still in place."

Brian Bethune, U.S. economist at Global Insight, said: "That number itself I don't think is going to have any impact one way or another on the Fed."

The Commerce Department said housing starts hit a 2.276 million unit annual rate in January, above Wall Street forecasts of a 2.0 million unit pace. December starts were revised up to a 1.988 million unit pace from an originally reported 1.933 million unit rate.

January's 14.5 percent rise was the largest monthly percentage gain since March 1994, when starts rose 17.0 percent.

New construction of single-family homes increased 12.8 percent to a record 1.819 million unit pace in January while multifamily housing starts surged 21.9 percent to a 457,000 unit pace, the Commerce Department said.

Starts jumped across the United States, climbing 29.2 percent in the Northeast, 23.7 percent in the Midwest, 16.9 percent in the West and 8.7 percent in the South.

Permits for future construction, an indicator of builder confidence, posted an unexpected increase, up 6.8 percent to a 2.217 million unit rate from December's 2.075 million pace. Economists had expected a decline to a 2.062 million pace.

Treasury bond prices fell after the data, with 10-year notes off 2/32 in price to yield 4.612 percent.

Economists and analysts said the data did not suggest the long-awaited cooling in the housing market had come to a halt.

"The housing numbers look pretty strong, but we have to discount them due to the mild weather effects," said Stephen Gallagher, chief U.S. economist at Societe Generale in New York. "We are getting confirmations from the companies themselves about lower orders."

Housing, which has helped boost the U.S. economy amid a years-long rally, will likely be among the many topics addressed by Federal Reserve Chairman Ben Bernanke on Thursday when he makes his first appearance before the Senate Banking Committee as head of the U.S. central bank.