Housing Starts Spike 14.6% in January

WASHINGTON ( TheStreet) -- Homebuilders began construction on 14.6% more homes in January, better than expected, while applications for building permits dropped 10.4%.

The Commerce Department said early Wednesday that housing starts came in at a seasonally adjusted annual rate of 596,000 in January. The figure compares with a downwardly revised rate of 520,000 housing starts in December and came in better than the rate of 540,000 economists had expected, according to consensus estimates listed on Briefing.com. December's housing starts rate was originally reported at a pace of 529,000.

Applications for building permits dropped 10.4% to a seasonally adjusted annual rate of 562,000, much lower than the revised December rate of 627,000. December's building permits rate was originally reported at 635,000.

Building permits are viewed as an indication of future home construction.

Stocks in the homebuilder sector were mostly lower Wednesday morning.

The SPDR S&P Homebuilders ( XHB) and iShares Dow Jones US Home Construction ( ITB), exchange-traded funds that tracks the sector, were flat in premarket trading.

Among individual builders, Toll Brothers ( TOL) and D.R. Horton ( DHI) were also flat ahead of the opening bell. Lennar ( LEN) lost 0.1%. Small-cap builder KB Home ( KBH) gained 0.3% in premarket trading, while PulteGroup ( PHM) added 1.4%.

-- Written by Miriam Marcus Reimer in New York.

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