New housing construction declined in January by the largest amount in almost a year, 7.9 percent, according to the Commerce Department.
In a report published Wednesday, the department revealed the number of residential buildings being built dropped to 1.9 million units. In December there were 2.07 million units under construction, which was the strongest pace in 19 years.
Many economists were predicting a drop in January from December levels because of the harsh winter weather. But January’s activity was still 100,000 units short of what economists had hoped. January’s decline was the steepest since February 2003.
Although the construction pace did not meet expectations, builders usually expect slower construction during winter months. According to a survey by the National Association of Home Builders, February construction percentages will probably not rise much, but construction will increase by March or June.
Still, home construction is not likely to meet 2003’s high percentages, which were influenced by record homes sales and extremely low interest rates. Economists predict the mortgage rate will rise to around 6.5 percent by the end of 2004.