© Reuters.

Investing.com - U.S. homebuilding had a torrid December, as higher interest rates and greater uncertainty over the economic outlook caused a sharp drop in investment.

tumbled by 11.2% to a seasonally-adjusted annual rate of 1.078 million units at the end of the year, the Commerce Department said. That was much worse than forecasts for a drop of 0.5% to 1.250 million and the weakest reading since September 2016.

The data were delayed due to the government shutdown that started at toward the end of 2018 and ran through January.

inched up 0.3% to a rate of 1.326 million units in December, compared to expectations for a 2.8% decline to 1.29 million.

The housing market has flattened out after a long expansion that goes all the way back to 2010.

The Federal Reserve has raised borrowing costs over the last couple of years and firms have been slow to respond to shortages in certain market segments, particularly at the lower end of the market.

U.S. existing home sales fell to a three-year low in January, according to data released on Friday.