Residential construction in January was healthier than expected.

Housing starts rose to a seasonally adjusted annual rate of 699,000, up 1.5% from 689,000 in December, according to data released Thursday morning by the Department of Commerce. But more encouraging: The January rate is up 9.9% from the same month a year ago.

Most analysts were looking for a figure anywhere from 645,000 to 671,000 for the month of January.

Flirting with the 700,000 mark is a good sign for the housing industry and those that supply it with products. Starts were at a pace of 702,000 in November 2011; but one has to look back more than three years for another example -- starts were at 777,000 in October 2008.

In the single-family column, housing starts were at a rate of 508,000, actually down 1.0% from December 2011, but up 16.2% from January's figure last year. 

Building permits offered a similar story of steady improvement. Permits were at a rate of 676,000 for January, 0.7% above December and 19.0% above the January 2011 figure.