Housing starts post biggest gain since September 1997
MSNBC News Services

WASHINGTON - Home construction rose strongly last month, marking a recovery from a weather-induced November slowdown. U.S. housing starts climbed 10.9 percent in December, the biggest jump in more than seven years, as groundbreaking activity increased across the nation.

The Commerce Department reported housing starts rose to a seasonally adjusted annual rate of 2.004 million units in December from an upwardly revised 1.807 million pace a month earlier. That was the largest one-month gain since an 11.2 percent increase in September 1997.

For the full year, housing starts rose 5.7 percent to 1.953 million. That is the slowest rate of increase since 2.2 percent in 2001.

Low mortgage lending rates, which averaged 5.8 percent in 2004 according to Freddie Mac economists, have been supporting the housing sector despite short-term interest rate increases by the U.S. Federal Reserve.

Permits for future groundbreaking, an indicator of builder confidence, fell 0.3 percent to a 2.021 million unit pace. For 2004 as a whole, permits were up 6.8 percent to 2.018 million units.

The Commerce Department said housing starts increased 18.8 percent in the Midwest, 10.6 percent in the South, 7.9 percent in the West and 5.7 percent in the Northeast in December.