U.S. housing starts rose 0.5 percent last month to a 21-year high, defying Wall Street expectations for a fall, as single-family starts jumped to a record, a Commerce Department report showed on Wednesday.
Housing starts climbed to a seasonally adjusted annual rate of 2.195 million units in February from an upwardly revised 2.183 million unit pace a month earlier, the government said. The monthly rate was the highest since a 2.260 million unit pace posted in February 1984.
Wall Street economists had expected housing starts to drop 5 percent to a 2.050 million unit rate from the 2.159 million unit rate initially reported for January.
Low mortgage rates have supported the housing sector despite short-term interest rate increases by the U.S. Federal Reserve. Fixed 30-year mortgage rates averaged 5.91 percent last week, excluding fees, up 22 basis points from 5.69 percent the previous week.
Single-family housing starts rose 0.3 percent to a 1.775 million unit pace, marking a record high.
But permits for future groundbreaking, an indicator of builder confidence, slid 2.7 percent to a 2.074 million unit pace. Analysts had forecast permits to decline to a 2.070 million unit pace from a revised 2.132 million unit rate the previous month.
The Commerce Department said housing starts jumped 20.4 percent in the U.S. Midwest, 19.1 percent in the Northeast and 0.7 percent in the West. Starts declined 8.1 percent in the South.
While interest rates are expected to increase over the course of 2005, the housing industry expects home prices and housing starts to remain strong, although below the levels recorded for 2004.
