The extreme cold of January took a heavy toll on the housing sector including housing starts which plunged 16.0 percent to a 880,000 annual unit rate. Starts of single-family homes fell 15.9 percent to 573,000 with condos similarly in line, down 16.3 percent to 307,000. Starts in the South, which is by far the largest region for this report, fell 12.5 percent with the West, the second largest region, showing a 17.4 percent decline.
Permits, which are less affected by weather, show a smaller decline and probably more closely reflect the underlying trend for the new home market. Permits fell 5.4 percent to a 937,000 unit rate with single-family homes showing relative strength, down only 1.3 percent. But permits for condos fell steeply, down 12.1 percent. Regionally, the South shows a 3.4 percent gain while the West shows a big decline, down 26.0 percent.
Heavy weather so far this month looks to pull down activity for February as well, which points to the spring as the season for a housing snap back. Existing home sales for January, which look to fall steeply based on a very weak pending home sales report, will be posted on the Econoday calendar this Friday.
Housing starts declined in December but the decrease was after a surge in November. Housing starts decreased 9.8 percent after spiking 23.1 percent in November. The December starts annualized level of 0.999 million units was up 1.6 percent on a year-ago basis. The drop in starts was led by the multifamily component which fell 14.9 percent after jumping 30.4 percent in November. The single-family slipped 7.0 percent, following a 19.5 percent boost the prior month. Permits suggest temporary slippage in the housing sector. Overall permits decreased 3.0 percent, following a 2.1 percent dip in November. The 0.986 million unit pace was up 4.6 percent on the year. Atypically adverse winter weather may have played a role in slippage for starts and permits for December.