US home construction fell sharply last month while producer prices moderated, according to government data this afternoon.
The data heightened expectations the Federal Reserve would lower interest rates later this year.
Bond prices rose and the dollar weakened on the news, despite the role that the weather may have played in influencing the housing numbers.
The Commerce Department said that the pace of US home construction shrank 14.3 per cent in January, the sharpest drop since October that ran against two months of increases and was much worse than economists had expected.
Investors betting on a Fed rate cut in June lifted the chances to as high as 24 per cent from 14 per cent overnight and zero early this week, according to interest rate futures.
Housing starts clocked an annual pace of 1.408 million units in January compared to 1.643 million units in December.
January's starts rate was actually the lowest since August 1997, when it was 1.390 million, while the 28.5 per cent decline in starts recorded in the west was the steepest fall since January 1979's 33 per cent slump.
Warm weather boosted construction in December but returned to more seasonally typical chilly conditions last month.