U.S. housing construction permits, a barometer of economic activity that includes imports of furniture and other household goods, rose 5.6 percent in March to its highest level in 16 months, the Commerce Department reported.

Single-family housing starts dropped 0.9 percent to an annual rate of 531,000 units after a 5.7 gain in February. Construction of multifamily units rose to a seasonally adjusted annual rate of 95,000. Overall construction was at an annualized rate of 626,000, above the 610,000 projected by economists.

The slump in housing markets has contributed to slowness in sales of furniture and other household items. The Census Bureau reports that imports of those goods fell to $18.9 billion last year from $23.7 billion in 2008.

Patrick Newport, U.S. economist at IHS Global Insight, cautioned that housing data remain inconclusive. Sales of new homes tumbled 23 percent between October and February, while single-family permits increased 14 percent.

 “This is odd, since these two numbers usually track one another closely. The divergence suggests that builders, anticipating a surge in demand from the second homebuyers’ tax credit, took out permits to build speculatively built homes,” he said.

Newport said the April 23 report on March sales of new homes may shed more light: “If we get another dreary report, builders will scale back, and single-family housing starts could remain flat for several more months.”

Materials behind the housing market have been growing in many transport networks this year after the depressed business helped the decline in volume across the shipping world. Class 1 railroads saw lumber and wood products shipments grow about 9 percent in the first quarter compared to last year, and that housing-related business grew 21.6 percent in the week ending April 3. See "Short Line Volume Spikes" and "Large Railroads See Rebound in Weekly Traffic."

But Wayne Johnson, logistics chief at American Gypsum, which supplies construction material to retailers such as Home Depot, said recently the company was still operating at less than its full capacity even with more shipping volume this year.

Source: JOC