Last Update: 19-Feb-14 09:08 ET
- Housing starts fell 16% in January, from an upwardly revised 1.048 mln (from 999,000) in December to 880,000. The Briefing.com consensus expected housing starts to fall to 963,000.
- There are some questions about how much of a role the adverse weather played in the decline. Surely the 67.7% decline in starts in the Midwest was partially weather driven. However, starts in the South, which was not that affected by the polar vortex, declined 12.5% in January. Furthermore, the hard-hit Northeast saw starts increase 61.9% in January.
- Normally, an exogenous shock – such as the weather – would result in a sizable rebound in the next month or two. However, after looking at all of the regional data, it is difficult to state with assurance that starts will return to the 1.00 mln trend that they averaged in November and December in the near future.
- In fact, the 880,000 gain was almost exactly the average the number starts from April 2013 – October 2013. To us, that suggests that starts returned to a historical trend as opposed to a downward shock from a weather-like event.
- Furthermore, the number of homes under construction increased a minor 1.3% in January to 715,000. More importantly, the increase in the number of homes under construction did not come from weather-related delays. The number of homes completed in January, which would have stalled during inclement weather, increased 4.6% to 814,000.
- Altogether, the evidence does not point toward weather being the main culprit for the large decline in housing starts in January.
- There are questions that the weather is entirely blamed for the decline in January housing starts.