A government shutdown-delayed report released by the Commerce Department on Tuesday showed a much steeper than expected drop in U.S. housing starts in the month of December.
The report said housing starts plunged by 11.2 percent to an annual rate of 1.078 million in December from the revised November estimate of 1.214 million.
Economists had expected housing starts to dip by 0.5 percent to a rate of 1.250 million from the 1.256 million originally reported for the previous month.
With the much bigger than expected decrease, housing starts plummeted to their lowest annual rate since hitting 1.064 million in September of 2016.
Single-family housing starts tumbled by 6.7 percent to a rate of 758,000, while multi-family housing starts nosedived by 20.4 percent to a rate of 320,000.
Meanwhile, the Commerce Department said building permits rose by 0.3 percent to a rate 1.326 million in December from the revised November rate of 1.322 million.
Building permits, an indicator of future housing demand, had been expected to tumble by 2.9 percent to a rate of 1.290 million from the 1.328 million originally reported for the previous month.
The unexpected uptick in building permits came as multi-family permits surged up by 4.9 percent to a rate of 497,000, more than offsetting a 2.2 percent drop in single-family permits to a rate of 829,000.
Last Tuesday, the National Association of Home Builders released a separate report showing a significant increase in U.S. homebuilder confidence in the month of February.
The report said the NAHB/Wells Fargo Housing Market Index climbed to 62 in February after rising to 58 in January. Economists had expected the index to inch up to 59.
With the increase, the index continued to recover after hitting a more than three-year low of 56 in December.
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