Blizzards and High Prices: How Long Could the Record Last?

The slowing of the housing construction market that economists foresaw for December finally happened in January.  It came as no surprise that highest rate of housing starts since February of 1984, which dropped by 7.9%in from 2,067,000 in December  to 1,903,000, fell in the first month of the new year. It was just a little startling how far the rates fell.

According to an article in the Miami Herald, much of the drop-off in housing construction numbers can be blamed on the wildly-cold weather on the east coast. Back in January, temperatures plummeted well below freezing  for a period,  and reports of zero-degree weather with accompanying wind chill factors  flashed on news stations across the nation.  The Northeast saw a 14% drop in housing starts, and the Midwest felt an even bigger loss of 21%.

In California, research was published and reported on National Public Radio that although housing sales were up, and mortgage rates were down, the renters?EUR??,,????'??? market was growing as housing prices had outraced most potential homebuyers?EUR??,,????'??? salaries.  And in December, multi-unit construction boosted the rate of housing starts towards the positive.

Privately-owned housing units that were issued permits in January fell 2.8% from December to 1,899,000. Single-unit homes experienced a 2.8% drop as well, landing at the rate of 1,487,000. However, permits issued for 2-4-unit homes rose 24.7% to 96,000 units.

The number of homes still under construction at the end of the period rose by 1% to 1,193,000 in January. Single-unit homes under construction hopped 0.9%, while homes with five units or more increased 1.4%.

Seasonally Adjusted Rates

New Privately-Owned Housing Units Authorized in Permit-Issuing Places

Units		Number in Thousands of Units	% Change from Dec '03	% Change   from Jan '03
Total Homes		1899	-2.8	+6.9
1 Unit		1487	-2.8	+5.8
2-4 Units		96	+24.7	+10.3
5+ Units		316	-8.7	+11.3

New Privately-Owned Housing Units Authorized, but Not Started

Units		Number in Thousands of Units	% Change from Dec '03	% Change from Jan '03
Total		167.2	+0.4	+5.4
1 Unit		107.9	+2.8	+6.4
2-4 Units		5.5	+15.0	+30.3
5+ Units		53.9	-5.2	+1.6

New Privately-Owned Housing Units Started

Units		Number in Thousands of Units	% Change from Dec '03	% Change from Jan '03
Total		1903	-7.9	+4.1
1 Unit		1537	-8.0	+1.9
5+ Units		339	-8.1	+21.9

New Privately-Owned Housing Units Under Construction at End of Period

Units	Number in Thousands of Units	% Change from Dec '03	% Change from Jan '03
Total	1193	+1.0	+13.2

New Privately-Owned Housing Units Completed

Units	Number in Thousands of Units	% Change from Dec '03	% Change from Jan '03
Total	1709	-2.3	+3.8