By MARTIN CRUTSINGER
AP Economics Writer
WASHINGTON (AP) — The construction of new houses edged back slightly in January after a December surge that had pushed spending on residential construction to its highest level in 13 years.
The Commerce Department reported Wednesday that builders started construction in January on 1.57 million houses, at a seasonally adjusted annual rate, a decline of 3.6% from the figure for December. The December figure had marked the highest point the measure had reached since late 2006, at the peak of the housing boom of the last decade.
Economists had expected a slight pullback from the December surge, which was attributed in part to unseasonably warm weather.
Application submissions for building permits, considered a good sign of future activity, increased 9.2% in number in January to an annual rate of 1.56 million units.
The construction of single-family homes fell 5.9% to a seasonally adjusted annual rate of 1.01 million homes, and construction in the small-apartment category edged up 0.7% to 557,000 units.
After being a drag on economic activity for more than a year, home building rebounded last summer, spurred by rising demand as mortgage rates dropped in response to rate reductions by the Federal Reserve.
Economists believe housing will remain strong this year, helped by low mortgage rates and unemployment that is near a half-century low. But some caution that the high levels of construction starts seen in December and January may be overstating the strength of the housing industry.
“Let’s wait until the spring when new home starts would normally jump before getting too pumped up about a potential home construction boom,” said Joel Naroff, chief economist at Naroff Economics.
By region, home construction was up a sharp 31.9% in the Northeast and a smaller 1.2% in the West. Construction fell 25.9% in the Midwest and was down 5.4% in the South.