US housing starts fall in January, but construction is speeding up

Washington U.S. homebuilders slowed the pace of construction in January, breaking ground on fewer single-familyhousesahead of the spring buying season.

Housingstartsslipped 2 percent to a seasonally adjusted annual rate of 1.07 million last month, down from 1.09 million in December, the Commerce Department said Wednesday.

Leading that decline was a sharp 6.7 percent monthly drop instartsfor single-familyhouses. Still, a healing economy has caused building activity to move at a faster clip, with single-familystartsclimbing 18.7 percent over the past 12 months.

Despite the monthly decline, the broader economy should help boost home sales and apartment construction this year.

"We have strong job growth, strong consumer confidence, still low borrowing costs," said Jennifer Lee, a senior economist at BMO Capital Markets.

In the past three months alone, the economy has gained more than a million new paychecks. Employers are adding workers at an annual clip of 2.3 percent, the fastest rate in the more than five-year recovery from the Great Recession.

The hiring has also fueled expectations that more millennials will sign leases on apartments. Builders have prepared for the additional demand, with apartment construction surging 12.1 percent in January and 24.5 percent over the past 12 months.

The improving labor market is expected to trigger greater demand to buy homes, boosting prices and then causing builders to further ramp up construction.

Metro areas with the fastest job growth are experiencing larger increases in home prices, Jed Kolko, chief economist at the real estate firm Trulia, said in a report last week.

"A growing economy fuelshousingdemand," Kolko said. Among the 10 metro areas with the biggest year-over-year price increases, nine had at least 2 percent job growth, he noted.

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US housing starts fall in January, but construction is speeding up