American builders broke ground on an unexpectedly high number of new homes last month, providing a rare glimmer of hope for the US housing market, where the financial crisis began - and where, most likely, it will first begin to ease.
The new data was published as the Federal Reserveassembled its open market committee to discuss interest rates and other measures that it is using to tackle the 15-month-old recession. Economists are not anticipating any change to official rates, which are already effectively at zero, and are instead looking to the Fed to signal if it could pump new money into credit markets to help bring down mortgage rates.
House prices continue to fall at record levels, but yesterday's data suggests that some builders are more optimistic for the future. The number of new projects jumped 22.2 per cent in February. It was the biggest rise since January 1990, and the first gain since last April.
New building permits rose 3 per cent last month, the first rise since April. Most of the rise came from new apartment building projects, while the construction of single-family homes rose just 1 per cent.
If these figures continue, they could suggest builders are expecting a trend towards cheaper homes.
Forecasters had predicted another decline in starts in February, and economists were split over whether the strong increase represented anything more than a one-month aberration.
"The figures are volatile in the winter months," said economist Kevin Logan. "February is a short month, and one week of really nice weather can get housing starts on the way, so this looks like a bounce rather than a bottom."
The Fed has held interest rates in a zero-0.25 per cent range since December and has also pursued policies of quantitative easing similar to those adopted by the Bank of England.
