New U.S. housing starts and permits unexpectedly rebounded in February, according to data on Tuesday that provided a rare dose of good news for the recession-hit economy and fractured housing market.
The Commerce Department said housing starts jumped 22.2% to a seasonally adjusted annual rate of 583,000 units from 477,000 units in January. That was the biggest percentage rise since January 1990 and also marked the first increase since last April.
"That is an encouraging sign for the U.S. economy. It is good signal of what is to come. With the rally in equities we hopefully have seen a bottom for the economy here," said Matt Esteve, foreign exchange trader at Tempus Consulting in Washington.
U.S. stocks have been on the rise over the last several days and the major indexes opened flat on Tuesday. U.S. government bond prices trimmed gains after the data and the U.S. dollar fell against the euro as risk aversion eased.
The data came as the Federal Reserve's policy-setting committee was due to start a scheduled two-day meeting on Tuesday, It is expected to leave the target for its benchmark overnight funds rates unchanged at zero-0.25%.
But the statement at the end of the meeting on Wednesday will be scrutinized for clues on the central bank's readiness to start buying Treasuries to boost its efforts to jump-start an economy in recession since December 2007.
New building permits, which give a sense of future home construction, rose 3.0 percent to 547,000 units, from 531,000 units in January. That also marked the first advance in permits since April last year.
Compared to the same period in 2008, housing starts were down 47.3 percent in February and permits declined 44.2 percent. Completions rose 2.3 percent to a rate of 785,000 from January's 767,000.