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Construction of new US homes edged higher in February after a plunge in January, government data showed Tuesday in a report underscoring the recovery in the housing market.
Housing starts rose 0.8 percent to an annual rate of 917,000 in February, rebounding from a revised 7.3 percent monthly drop in January, the Commerce Department said.
Last month's pace of new construction was slightly weaker than expected, but nevertheless was nearly 28 percent higher than in February 2012.
Single-family housing starts, the most important segment of the market, rose 0.5 percent to its highest level since June 2008 and were up 31.5 percent from a year ago. New multi-unit construction rose 1.4 percent.
The Midwest led the gains, with a 37.5 percent rise, followed by the Northeast, up 18.4 percent. Starts fell by single digits in the West and South.
Building permits, an indicator of potential construction activity, came in stronger than expected, climbing 4.6 percent from January to an annual rate of 946,000.
The report suggested the continuing recovery in the housing sector after a price bubble collapsed in 2006. Mortgage interest rates hovering at historic lows, rising home prices amid tight inventory and the slowly improving jobs market have underpinned the improvement.
Sales of new homes in the United States in 2012 were up nearly 20 percent from the prior year.
"More positive news from the all-important US housing sector should provide a boost to sentiment," said Jennifer Lee of BMO Capital Markets.
"Underlying fundamentals continue to support this important sector and will help push starts higher in the year ahead."