The Commerce Department reported(.pdf) that housing starts fell 16 percent last month, the sharpest decline in three years, and permits for new construction fell 5.5 percent.
As with many other recent economic reports, bad weather is getting much of the blame for the result, however, there were tremendous differences in homebuilding activity across the country in January as housing starts actually surged more than half in the Northeast. Large seasonal adjustments at a time of the year when new construction is normally at its lowest also make this data difficult to interpret.
Housing starts fell from an annual rate of 1.048 million units in December to just 880,000 in January as new construction of single-family homes fell by 15.9 percent, virtually the same amount as the overall decline. The drop in building permits was less severe, down from a rate of 991,000 to 937,000 last month.
The rate of housing starts fell in three of the four U.S. regions, plunging 68 percent in the Midwest, down 17 percent in the West, and 13 percent lower in the South while starts jumped 62 percent in the Northeast where most of the bad weather was seen last month. Given the historic bad weather in the Southeast this month, next month’s report on February homebuilding activity is likely to be even worse than this one.