U.S. Home Construction Jumps, Led by More Apartment Building

WASHINGTON (AP) -
New homes under construction in Canonsburg, Pa. (AP Photo/Gene J. Puskar)

U.S. builders ramped up home construction in December, led by a surge of apartment building, while single-family houses lagged.

Housing starts jumped 11.3 percent last month, to a seasonally adjusted annual rate of 1.2 million, the Commerce Department said Thursday. The figures are volatile month to month: Starts plummeted in November after a big gain in October. Apartment construction soared 53.9 percent last month, while single-family housing starts fell 4 percent.

The figures cap a modestly healthy 2016 for home construction. Single-family home building increased 3.9 percent and apartment building was 10.3 percent higher.

The report adds to other recent evidence that home sales and construction have largely weathered an increase in mortgage rates since the fall. Steady job creation and some early signs of wage gains have made it possible for more Americans to afford to buy.

Still, the housing market faces challenges this year that could thwart further growth. The Federal Reserve may continue pushing up the short-term interest rate it controls, leading to higher borrowing costs. And with relatively few homes on the market, buyers have fewer choices, pushing up prices.

Building permits, a sign of future construction, slipped 0.2 percent in December. Permits for single-family homes rose, however, while apartment permits dropped.