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US Building Permits Fall in December

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US Building Permits Fall in December

Authorizations for future building projects in the US declined faster than forecast in December, a sign residential construction activity may pause in the early part of 2014.

Building permits fell 3 percent in December to a seasonally adjusted annual rate of 986,000, official data from the Commerce Department showed Friday. A median estimate of economists polled by Thomson Reuters called for 1.015 million. Year-on-year, December building approvals rose 4.6 percent.

Single-family authorizations in December fell 4.8 percent to 610,000. Multi-family dwellings reached 350,000, official data showed. Despite the bigger than forecasted decline, December capped off a solid year for new authorizations. In total, 974,700 housing permits were authorized in 2013, up 17.5 percent from the previous year.

Building permits are used to gauge future activity in the residential construction sector. The bigger than forecasted fall suggests home builders may delay projects ahead of the spring. This trend is unlikely to persist, however, as rising home prices are likely to initiate more construction projects this year.

Meanwhile, housing starts in December fell to a seasonally-adjusted annual rate of 999,000. This represents a decline of 9.8 percent from the revised November estimate of 1,107,000. The drop, which was smaller than forecast, showed ground-breaking remained strong amid colder than average weather. 2013 was the strongest year for residential construction activity since 2007. In total, 923,400 residential projects were started in 2013, up 18.3 percent from the prior year.

The residential real estate market will continue to be a key driver of US recovery in 2014. Bigger gains in employment, combined with higher wage growth, could offset the decline in property affordability due to higher mortgage rates.

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