Housing starts fall sharply at start of year
WASHINGTON — Residential construction starts in January fell sharply from last year’s soaring year-end activity, the government said Wednesday.
The pattern in the latest housing data is similar to that of other major economic indicators of late. Job growth, industrial production and retail sales all have weakened at the beginning of this year from upwardly revised numbers late last year, suggesting that the economy was stronger at the end of the fourth quarter than initially thought but is off to a slow start in 2013, possibly as businesses worried about the uncertain outlook on government spending and taxes.
Housing starts last month came in at an annual pace of 890,000 units — an 8.5% decline from an upwardly revised December figure of 973,000. The drop was entirely due to fewer multi-family starts; single-family construction continued to rise, but only barely.
Apartment starts can be highly volatile, and some analysts pointed out that last month’s data, although seasonally adjusted, still could have been affected by the aftermath of Superstorm Sandy and other factors. Housing starts plunged last month in the Northeast and the Midwest, but were up 17% in the West.
Yet Wednesday’s data showed that the number of permits issued and homes completed nationwide in January continued to rise. And those figures, as well as housing starts, remain significantly higher than year-ago levels.
“Although the top-line housing starts number came in weaker than expected, the components paint a picture of a steadily, if slowly reviving, housing market,” said Celia Chen, a housing analyst at Moody’s Analytics. “Of particular note,” she added, "[housing] completions are finally on a solid path upward. A sustained housing recovery is a positive for the broader economy.”
Some analysts lowered their forecasts for first-quarter economic growth by a notch after the residential construction numbers were reported. The pullback in housing starts, said TD Bank economist Michael Dolega, is consistent with a more gradual pace of home-building of about 900,000 starts. [Updated, 9:37 a.m. PST Feb. 20: Dolega adds that he expects housing starts will pick up to a rate of about 1 million units by the end of the year.]
Analysts say housing construction will be somewhat constrained by higher taxes, tight credit and difficulties finding skilled workers.
Builders broke ground on 780,000 apartments and single-family homes last year, up from 609,000 in 2011.
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