U.S. home building projects started in June surprisingly rose 9.1 percent due chiefly to a change in New York City building codes that, if it were ignored, would have seen starts decrease by 4.0 percent, a government report said.
The Commerce Department said housing starts set an annual pace of 1.066 million units in June, the highest since February. Economists polled ahead of the report were expecting a 960,000 unit rate.
New York City enacted a new set of construction codes effective July 1, that largely explained an 11.6 percent increase in building permits and the starts number, the government said.
Excluding multifamily data in the Northeast, the government said, there was a 0.7 percent increase in permits and a 4.0 percent decrease in housing starts in June.
Building permits climbed to 1.091 million, higher than the 960,000 expected by economists.
In a separate report, the number workers filing new claims for jobless benefits rose by a less-than-expected 18,000 last week.
"Jobless claims rose, but not dramatically, after a big decline a week earlier. They still suggest a weak economy, but not dramatic job cuts," said Gary Thayer, Senior Economist, Wachovia Securities, St. Louis, Missouri.
Due to the code change, home starts in the Northeast saw a 102.6 percent increase over the prior month and permits were rose 73 percent.
The Midwest saw a 10.5 percent drop in starts and the West saw a 8.2 percent decline while the South saw starts climb 0.4 percent.
"The housing starts number is bloated by a building authorization technicality in New York City. New building codes came into effect on July 1, so builders started multifamilystructures before then," said Pierre Ellis, Senior Economist, Decision Economics, New York. "The important thing is that single-family starts were weaker than expected."