US Homebuilding, Import Prices Jump Surprisingly in January

US homebuilding and import prices jumped surprisingly in January, boosting inflation and GDP growth expectations for this quarter.

“The economy is back on a winning path for stronger growth even if it is not firing on all cylinders with all sectors participating,” said Chris Rupkey, chief economist at MUFG in New York.

The homebuilding sector rose to more than a one-year high, driven by solid gains in the construction of both single- and multi-family housing units.

Housing rose 9.7% to a seasonally adjusted annual rate of 1.326 million units, the Commerce Department said. It was the highest level since October 2016 and followed an upwardly revised sales pace of 1.209 million units.

US homebuilding permit issuance also increased to its highest since June 2007 in January, as building permits grew 7.4% to a rate of 1.396 million units.

Single-family homebuilding increased 3.7% to a rate of 877,000 units in January. Single-family home construction rose in the South and Northeast but dropped in the Midwest and West.

Permits to build single-family homes slid 1.7%, but single-family home completions gained 2.2% to 850,000 units in January, the highest level since June 2008.

Starts for the multi-family housing segment jumped 23.7% to a rate of 449,000 units, and permits for the construction of multi-family homes surged 26.5%.

“Builders have ramped up construction of single-family homes and completions should rise going into the spring selling season,” said Mark Vitner, senior economist at Wells Fargo Securities in North Carolina.

US Import Prices

US import prices soared in January, thanks to the cost of imported petroleum and a range of products increased.

The Labor Department said on Friday that import prices rose 1.0% last month after an upwardly revised 0.2% rise in December.

In the 12 months through January, import prices soared 3.6%, the largest rise since April 2017, compared to a 3.2% rise in December.

Petroleum-import prices rose 4.3% from December, and prices for imports excluding petroleum increased 0.5% last months, an increase last exceeded in April 2011.

Meanwhile, US export prices also increased 0.8% in January after a revised 0.1% in December. Export prices had been expected to rise 0.3% compared to the 0.1% drop originally reported for the previous month.

The better-than-expected export price growth came as rising prices for non-agricultural exports more than offset a slight drop in prices for agricultural exports.

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