U.S. housing starts rebounded more than expected in February, hitting their highest level in five months, as builders ramped up the construction of single-family homes in a sign of confidence in the economy.
Groundbreaking increased 5.2 percent to a seasonally adjusted annual pace of 1.18 million units, the highest level since September, the Commerce Department said on Wednesday. January's starts were revised up to a 1.12 million-unit rate from the previously reported 1.099 million-unit pace.
Economists polled by Reuters had forecast housing starts rising to a 1.15 million-unit pace last month.
The rebound in groundbreaking activity could lift first-quarter gross domestic product growth estimates, which were cut on Tuesday following February's weak retail sales report. The housing sector is being supported by a firming labor market, which is encouraging young adults to leave their parents' homes.