WASHINGTON – U.S. home construction fell 6% in January but applications for building permits, which typically signal activity ahead, rose sharply.
The decline pushed home and apartment construction down to a seasonally adjusted rate of 1.58 million units last month, compared with 1.68 million in December, the Commerce Department reported Thursday.
Single-family construction starts dropped 12.2% while construction of apartment units rose 16.2%.
Even with the January dip, ultra-low mortgage rates and rising demand from Americans ready for a bigger house after a year of living in a pandemic will in all likelihood mean a strong year for the housing market in 2021.
Hints of a sustained housing push could be found Thursday in the Commerce numbers.
Applications for building permits, considered a good sign of future activity, spiked 10.4% in January to an annual rate of 1.88 million units.
And strong sales this year would only extend a banner 2020 when home construction jumped 7% to 1.38 million units. That was the strongest showing since a housing boom in 2006.
“We still expect recovering demand, low mortgage rates and a shortage of supply to support a healthy rate of new home construction and the risk may be for further upsides surprises,” said Nancy Vanden Houten, lead economist at Oxford Economics.