Housing Starts Continue Fast Pace in January
Housing construction showed surprising strength in January as unusually mild weather at the beginning of the month helped keep building activity above the 1.8-million-unit mark for the second consecutive month, the government reported Wednesday.
The Commerce Department said that new homes and apartments were built at a seasonally adjusted annual rate of 1.806 million units in January, down a scant 0.2% from December, when construction activity had posted a giant 10.4% increase.
Analysts, who had been forecasting a significant decline in January, said that mild weather helped boost the figures, just as it had in December.
But they also said that the housing industry, which had been expected to weaken somewhat this year, is showing more strength than originally forecast.
Building Permits Plunge
For all of last year, construction activity rose 3.7% to the highest level in eight years as the housing industry enjoyed the lowest home mortgage rates of this decade. Rates dropped further in January to a nationwide average for fixed-rate loans of 9% with some parts of the country reporting mortgage rates as low as 8.5%.
January’s report showed that construction of single-family homes remained strong, rising 2.4% from December to an annual rate of 1.26 million units. But construction of multifamily units fell by 5.5% to an annual rate of 551,000 units.
Building permits, considered a good sign of future activity, plunged 11.6% in January to an annual rate of 1.69 million units. It was the biggest monthly decline since March, 1984, but analysts said the weakness was overstated. They noted that permits had risen a huge 18.4% in December as California builders rushed to take out applications before Jan. 1 when higher fees took effect.
Housing construction fell 4.3% in the West to an annual rate 489,000 units in January followed by a 1.7% decline in the South to an annual rate of 583,000 units.
The Northeast, the hottest housing region last year, saw construction rise 7.5% in January to an annual rate of 330,000 units, followed by a 1.8% increase in the Midwest, where starts increased to an annual rate of 404,000 units, the highest rate since December, 1978.
