January's increase in housing starts from December was the largest monthly percentage gain since March 1994, when starts rose 17 percent.
New construction of single-family homes increased 12.8 percent to a record 1.819 million unit pace in January, while multifamily housing starts surged 21.9 percent to a 457,000 unit pace, according to the Commerce Department.
Starts rose across the United States, climbing 29.2 percent in the Northeast, 23.7 percent in the Midwest, 16.9 percent in the West and 8.7 percent in the South.
Permits for future construction, an indicator of builder confidence, posted an unexpected increase, up 6.8 percent to a 2.217 million unit rate from December's 2.075 million unit pace. Economists had expected permits to decline to a 2.062 million unit pace.