Washington – Construction of new homes and apartments, defying forecasts of a housing slowdown, shot up in January at the fastest pace in more than three decades.
The Commerce Department reported Thursday that building activity was up 14.5 percent last month compared with December, pushing construction to a seasonally adjusted annual rate of 2.276 million units.
That was the fastest construction rate since March 1973, but it was expected to be a one-time blip caused by unusually warm weather that prompted builders to start work on more homes.
Analysts are forecasting that housing construction will slow this year as the nation’s five- year housing boom quiets down. Some economists, however, said that a 6.8 percent rise last month in building permits, which are not affected by the weather, could be a signal that housing activity will not slow as much this year as previously thought as long as mortgage rates do not rise too quickly.
“Low long-term rates and a strong jobs market will continue to provide substantial support to the housing market,” said Bob Walters, chief economist for Quicken Loans, an online lender.
The 14.5 percent rise in construction in January followed December’s 6.9 percent drop.
For January, construction of single-family homes rose by 12.8 percent to an annual rate of 1.819 million units, an all-time high.
Construction of multifamily units was up 21.9 percent to an annual rate of 457,000 units.
Permits, considered a good indication of future activity, rose to an annual rate of 2.217 million units. Applications had been down 4.1 percent in December.
The National Association of Realtors reported Thursday that the slowing in sales that started at the end of 2005 has yet to dampen price gains. It found that 72 metro areas reported double-digit gains in median prices for existing homes sold in the last three months of 2005, compared with the same period in 2004.
