Housing Starts, Permits Tumble; Mortgage Applications Fall

AP
By Lucia Mutikani
and Rodrigo Campos


WASHINGTON -- U.S. housing starts recorded their biggest drop in almost three years in January, likely weighed down by harsh weather, but the third month of declines in permits pointed to some underlying weakness in the housing market.

That weakness was evident in another report released Wednesday that showed a drop in applications for new mortgages.

The Commerce Department said Wednesday groundbreaking for new homes tumbled 16 percent to a seasonally adjusted annual rate of 880,000 units, the lowest level since September. The percentage drop was the largest since February 2011.

Starts for December were revised up to a 1.05 million-unit pace from the previously reported 999,000-unit rate.

Economists polled by Reuters had expected starts to fall to a 950,000-unit rate in January

Starts in the Midwest tumbled a record 67.7 percent, suggesting unseasonably cold weather could have disrupted activity.
But at the same time groundbreaking in the Northeast surged to the highest since August 2008.

Frigid temperatures have been blamed for the sharp slowdown in hiring in December and January. They also chilled manufacturing output last month and have been cited for the unexpected drop in retail sales in January.

But not all of the weakness in data can be attributed to the cold weather, amid evidence the economy was already losing momentum towards the end of the fourth quarter.

Groundbreaking for single-family homes, the largest segment of the market, fell 15.9 percent to a 573,000-unit pace in January. That was the lowest level since August 2012. Starts for the volatile multi-family homes segment dropped 16.3 percent to a 307,000-unit rate.

Permits to build homes fell 5.4 percent in January, the largest drop in since June, to a 937,000-unit pace. Permits for single-family homes slipped 1.3 percent. Multifamily sector permits declined 12.1 percent.

Separately, industry group said applications for U.S. home mortgages fell in the latest week, with both purchase and refinancing applications down.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, fell 4.1 percent to 380.9 in the week ended Feb. 14.

The interest rate on fixed 30-year mortgages averaged 4.50 percent last week, up 5 basis points from the previous week.

The MBA's seasonally adjusted index of refinancing applications fell 2.7 percent. The gauge of loan requests for home purchases, a leading indicator of home sales, fell 6.3 percent to hit its lowest level since September 2011.

The data comes a day after the National Association of Home Builders reported that U.S. homebuilder confidence suffered its largest one-month drop ever in February.

Wednesday's survey covers more than 75 percent of U.S. retail residential mortgage applications, according to MBA.


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fpecar4525

What a con job. The weather wasn't a real factor here. If it was weather, what accounts for this information as printed today in the WSJ?:
"The pace of housing starts last month actually rose in the chilly Northeast by 61.9%. But it fell 67.7% in the Midwest to the lowest pace on record. Starts also fell 12.5% in the South and 17.4% in the West, which has experienced relatively warm weather".

Once again, the media is spinning the data.

February 19 2014 at 1:34 PM Report abuse +1 rate up rate down Reply
s.lappin

The major finding of this article is the days of arbitrary increases in the real estate market are gone. Is this surprising, the answer in “no.” But a more important question is “why, will we no longer have these arbitrary increases.” The real estate market has made a remarkable shift from what we term an "inefficient" market to the current “efficient” market. Before websites like Zillow, Trulia, Movato, Yahoo! Real Estate, only real estate agents were privy to high-level market information. The information gap between real estate insiders, home sellers and buyers was enormous, and the inefficient market reflected this discrepancy. Transparency

With the advent of Internet technology, Homebuyer’s and sellers in today's efficient market have access to a wealth of information, and are able to determine an unbiased estimate of the true value of a home. This has largely eliminated the huge, arbitrary increases in home values that were common during the inefficient market days.

February 19 2014 at 12:07 PM Report abuse rate up rate down Reply