Washington, DC, Feb. 18--Home construction took its first fall in five months in January, making a larger-than-expected drop that was accompanied by a decrease in building permits. Housing starts declined by 7.9% last month to a seasonally adjusted 1.903 million annual rate, the Commerce Department said Wednesday.
The government also lowered an earlier estimate to show starts climbed just 0.6% to a 2.067 million rate in December. Starts for that month were previously reported as rising 1.7% to a 2.088 million annual rate. November housing numbers were unchanged.
The latest report was weaker than analysts had expected. A Dow Jones Newswires-CNBC poll of 18 economists predicted housing starts would slip 4.3% to a 1.998 million annual rate in January.
The broad-based drop carried starts to their lowest level in five months. It was the first drop since last August. The 7.9% decrease followed a month when construction had advanced to its highest mark in nearly 20 years.
The housing sector of the U.S. economy has been strong for the past several years, defying analysts' expectations as it weathered the 2001 recession. Low mortgage rates helped drive growth. Last year, rates on a conventional 30-year fixed rate mortgage reached a four-decade low of 5.21% in June. From there, it crept up and held above 6% for a while but eased somewhat and has been below that level this year.
Housing economists have predicted home sales and construction will ease, yet remain strong in 2004, following last year's record pace.
The January report on home construction showed building permits, an indicator of future building activity, fell by 2.8% to a 1.899 million annual rate.
Single-family starts decreased by 8% to a 1.537 million annual rate. Multifamily starts--starts on apartment buildings--tumbled by 8.1%.
Housing starts across the nation declined. New construction was down by 5.2% in the South, 1% in the West, 21% in the Midwest, and 14% in the Northeast.
Year-over-year, housing starts advanced by 4.1% from January 2003.
An estimated 121,400 houses were actually started last month, based on seasonally unadjusted figures. An estimated 124,600 building permits were issued, also based on unadjusted figures.
