U.S. homebuilding fell in January as the construction of multi-family housing projects dropped, but upward revisions to the prior month's data and a jump in permits to a one-year high suggested the housing recovery remained on track.
Housing starts declined 2.6 percent to a seasonally adjusted annual rate of 1.25 million units, the Commerce Department said on Thursday.
December's starts were revised up to a rate of 1.28 million units from the previously reported 1.23 million pace.
Homebuilding was up 10.5 percent compared to January 2016. Permits for future construction jumped 4.6 percent in January to a rate of 1.29 million units, the highest level since November 2015.
Economists polled by Reuters had forecast groundbreaking activity slipping to a rate of 1.22 million units last month and building permits rising to a 1.23 million pace.
The housing market recovery is being driven by a strong labor market, which is boosting employment opportunities for young people and supporting household formation.
Higher mortgage rates could, however, slow demand for housing.