Housing starts in December dropped 8.9 percent to an annual pace of 1.93 million units, lagging behind economists’ expectations of 2.04 million, the U.S. Commerce Department reports.
For 2005 as a whole, however, home building was up 5.6 percent to 2.06 million units-a pace not seen since 1972.
Nariman Behravesh, chief economist of Global Insight, attributes about one-third of the monthly decline to bad weather but insists that “an underlying trend of weakness in the housing market” is primarily responsible.
Regionally, housing starts plunged 23.6 percent in the Midwest, 21.7 percent in the West, and 14 percent in the Northeast but climbed 5.2 percent in the South, likely due to rebuilding following devastating hurricanes along the U.S. Gulf Coast last fall.
The report also shows a 4.4 percent dip in building permits to an annual rate of 2.07 million, marking an eight-month low.