Photo Credit: William Bustamante


The number of housing starts and building permits dropped as expected for the month of January, but other factors seem to indicate that inclement weather wasn’t solely to blame.

The latest figures show that housing starts were down 16 percent below the December revised figures for both privately-owned and single-family homes – the biggest drop since November 2011. Building permits were also down for the third straight month.

The survey conducted on a monthly basis by the Commerce Department only asks builders whether they started construction – they are not questioned as to the reasons if a project had not initiated.


“Cold weather clearly put a chill on new home construction last month and this is also reflected in our latest builder confidence survey,” said Kevin Kelly, chairman of the National Association of Home Builders (NAHB) said in a statement. “Further, builders continue to face other obstacles, including rising materials prices and a lack of buildable lots and labor.”

Indeed, these other obstacles are reflected in the builder confidence survey released the day before, which showed a 10-point dip to 46. This is the first time since May 2013 that the housing market index has fallen below the 50-point mark, a troubling sign considering the figure has been steadily declining since then.

The economic indicator report issued by Wells Fargo states that “the trend in permits and recent drop in sentiment could be pointing to some looming underlying trouble in the coming months.”

The claim about rising material prices putting a damper on construction is not quite supported by the data produced by the Engineering News Record (ENR), the national news magazine for the construction industry. ENR produces a materials price index on a monthly basis which is based on current prices for cement, steel and lumber. Compared to May 2013, there has only been a 0.6 percent increase in prices, below the 1.6 rate of inflation.

The only increase in the new residential construction report was in housing completion, which was up 4.6 percent above the revised December estimate of 778,000 units. However, the stat is not indicative of any particular trend according to the Commerce Department. This is because an average home is completely built in six to eight months, and even in frigid temps, construction could be performed indoors.

While the U.S. added 48,000 construction jobs in January, workers in the Northeast are suffering. For William Bustamante, 29, the weather has had an effect on his job as a day laborer in the tri-state area.

“I’ve been working just 2 or 3 days a week, more or less,” he said. “It’s been tough.”