US home building slows in January

New construction of US homes fell for the second straight month in January, sagging to an eight-month low, official data released Wednesday showed.

The Commerce Department reported housing starts fell to an annual rate of 1.099 million units in January, a drop of 3.8 percent from the December rate of 1.143 million units, revised downward from 1.149 million.

It was the weakest construction pace since last May, when home starts came in at a rate of 1.190 million units per year.

The slowdown in January was sharpest for single-family homes, the largest share of the US housing market, where the rate dropped 3.9 percent from December. Starts on multi-family homes fell 2.5 percent.

Housing starts fell in all four regions of the country, with the Midwest hardest hit by a nearly 13 percent decline.

But the home building sector appeared to remain on solid ground after a strong 2015. Overall, January starts were up 1.8 percent from a year ago.

Building permits, an indicator of potential construction, also gave a brighter outlook for the housing market. Permits slipped 0.2 percent from December but were up 13.5 percent from January 2015.

"The trend in single-family permits -- the most important number in the whole report -- is rising," said Ian Shepherdson of Pantheon Macroeconomics.

"But we expect a significantly better performance in the spring, when the rising trend in mortgage applications should be transmitted into faster increases in construction activity."