U.S. housing starts, permits fall; trend points to recovery

consistent with an improving housing market.

Groundbreaking declined 1.6 percent to a seasonally adjustedannual 1.028-million-unit pace, the Commerce Department said onTuesday. November's starts were revised up to a 1.045

million-unit rate.

Economists polled by Reuters had forecast starts rising to a1.04 million-unit rate from October's previously reported 1.01million-unit pace.

Housing continues to be stymied by tepid wage growth, whichhas been far outpaced by home price increases. Higher mortgagerates are also a constraint, although they have since declined

from a peak reached in September 2013.

But with job growth accelerating, wages are expected to pick up next year and pull first-time buyers, especially young Americans, into the housing market, providing a tailwind for the

economy.

Last month's drop in groundbreaking was concentrated in the single-family homes segment, the largest part of the market, which fell 5.4 percent to a 677,000-unit rate. Single-family

starts had posted two straight months of hefty gains.

Starts for the volatile multi-family homes segment increased 6.7 percent to a 351,000-unit pace. The increase unwound some of October's 9.9 percent drop.

Multi-family starts continue to be driven by demand for rental units as many financially-strapped Americans shun home ownership.

Last month, permits dropped 5.2 percent to a 1.035 million-unit pace after two straight months of gains. That was the biggest drop since January.

Permits, which lead starts by three to four months, have been above the 1 million pace threshold since July.

Permits for single-family homes fell 1.2 percent to a 639,000-unit pace. Permits for multi-family housing tumbled 11.0 percent to a 396,000-unit pace. That followed two strong months

of big increases.

((Reporting by Lucia Mutikani; Editing by Paul Simao))