Housing Starts Explode

Warm weather drives the best rate since the Nixon administration.
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Housing starts and building permits rose sharply in January, surpassing economists' estimates.

The U.S. Census Bureau said Thursday that housing starts were at a seasonally adjusted annual rate of 2.276 million in January, up 14.5% from December and 4% above a year earlier. Economists expected 2.023 million starts, according to

Reuters

.

"It's the highest level since March of 1973," says Phillip Neuhart, a Wachovia economic analyst. "It's very surprising. The driving factor here is weather. In January, we had record warmth across the country."

Single-family housing starts in January were at a rate of 1.819 million, 12.8% above the December figure. Multifamily starts -- for buildings with five or more units -- totaled 427,000 in January, up 24.5% from December.

Building permits for new residential dwellings were at a seasonally adjusted annual rate of 2.217 million in January, up 6.8% from December and 3.8% above the year-earlier period.

The ramp-up in building and new permits comes at a time when several homebuilders -- most prominently

Toll Brothers

(TOL) - Get Report

and

KB Home

(KBH) - Get Report

-- have recently reported falling new order numbers and rising cancellations.

On Wednesday, the Mortgage Bankers Association said mortgage applications fell for the third week straight, with new purchase loans dropping 7.9% from the week before.