The pace of U.S. home construction rose 9% in February, beating analysts' predictions and running against dismal news in the subprime home financing sector, a government report showed.
The Commerce Department said housing starts set an annual pace of 1.525 million units in February compared with a 1.399 million unit pace in January. That's the sharpest month-over-month increase since a 13.1% rise in January 2006.
Economists had forecast February housing starts to rise to a 1.45 million unit pace from January's originally reported pace of 1.408 million units.
Building permits, which signal future construction plans, fell 2.5% to a 1.532 million unit pace. Economists were expecting building permits to register a 1.55 million unit pace, down from 1.571 million in January.
Tuesday's starts data runs against recent weakness in the subprime finance sector for riskier borrowers that has had many forecasters revising their predictions for a housing sector recovery this year. News of growing mortgage delinquencies, particularly in the subprime sector, shook financial markets early this month.
That unease might have been reflected in a private survey of homebuilders' sentiment that fell in March. The National Association of Homebuilders/Wells Fargo Housing Market Index slipped three points in March to 36 from a downwardly revised 39 a month earlier, the group said.
Readings below 50 indicate more builders view market conditions as poor rather than favorable.