US home construction accelerates

US house construction has bounced after a 50-year low in January

The rate of construction of new homes in the US soared by almost a quarter in February compared with the previous month, official figures have shown.

The US Commerce Department said the construction of new homes and apartments rose to an annual rate of 583,000 in the month.

In January, the annual rate to fell to 477,000 homes, the fewest in 50 years.

The jump, driven by an increase in apartments, came as a surprise to analysts, who had expected a drop.

But even with February's big jump in building activity, housing construction is still down by almost a half compared with the same month a year ago.

Sign of recovery?

The January rate was the lowest since the US Commerce Department started keeping records in 1959.

Some analysts were at a loss to explain the rise seen in February.

"We see no specific factor that might explain this jump," said Ian Shepherdson of High Frequency Economics.

This is an encouraging sign for the US economy. It is good signal of what is to come Matt Esteve, Tempus Consulting

"Multi-family starts are always noisy, but this is exceptional. With new home sales still falling and the [recent] months' supply at a record there is no reason for homebuilding to rise."

Applications for building permits, which are seen as a reliable indicator of future building activity, were also up by 3% to an annual rate of 547,000.

Wider impact

The collapse of the US housing market was a key factor in the global economic downturn.

And some analysts believe these housing figures are a sign that the economy may be on its way to recovery.

"This is an encouraging sign for the US economy. It is good signal of what is to come," said Matt Esteve at Tempus Consulting.

"With the rally in equities, we hopefully have seen a bottom for the economy here."

Others, however, were rather more circumspect.

"This is a temporary rebound, not a recovery," said Mr Shepherdson.