Housing starts unexpectedly plummet to lowest level in five months
foxbusiness.comNational Association of Home Builders CEO Jim Tobin provides professional analysis of the U.S. housing market following a tumble in demand as rates tick higher.
New U.S. home construction dropped in January to the lowest level in five months, underscoring the ongoing challenges facing the housing market.
Housing starts tumbled 14.8% last month to an annual rate of 1.33 million units, according to new U.S. Department of Commerce data released Friday. That is well below Refinitiv economists' forecast for a pace of 1.46 million units.
It marked the lowest level for housing starts since August 2023, and the biggest one-month drop in construction since the early days of the COVID-19 pandemic.
Applications to build – which measure future construction – also slid in January, falling 1.5% over the course of the month to an annualized rate of 1.47 million units. Compared with the same time last year, building permits are up about 8.6%.
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Homes under construction in Sacramento, California, on July 3, 2023. (David Paul Morris/Bloomberg via Getty Images / Getty Images)
«A home building revival is coming, but it didn’t arrive in January,» said Robert Frick, corporate economist at Navy Federal Credit Union. «High mortgage rates, with maybe a dash of cold weather, caused starts and permits to fall from December. We know that builders are ready to ramp up when rates fall, which could be as soon as spring.»
The housing market is grappling with an astronomic rise in mortgage rates over the past two years, but bad weather in many parts of the country may have weighed on growth last month.
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