According to the latest data, there was a significant decline in the rate of new housing starts in the United States in January 2024, with a decrease of 14.8%, marking the largest decline since April 2020. This decline was primarily due to builders reducing the size of new projects, coupled with the impact of cold weather, resulting in a slowdown in construction.

Government data shows that the housing starts in January dropped sharply from 1.56 million units the previous month to 1.33 million units, falling below Wall Street's expectations of 1.45 million units. If the monthly start rate remains constant at January's level, how many houses will be constructed throughout the year?

In addition to the mentioned reasons, there are some key details worth noting. For example, both single-family and multi-family housing construction experienced declines, with multi-family housing construction dropping by nearly 36%. Builders remain optimistic about future new home sales and demand as they anticipate interest rates to continue falling throughout the remainder of the year.

However, the number of building permits, which serve as indicators of future construction, also declined by 1.5%, totaling only 1.47 million. Specifically, new single-family housing construction decreased by 4.7%, while apartment construction plummeted by a staggering 35.8%.

Interestingly, the only region that saw an increase in construction was the Northeast, where single-family housing starts increased by 26.7%, while other regions experienced declines. Furthermore, while single-family housing permits increased by 1.6%, apartment permits decreased by 9%. Overall, housing starts rates are typically volatile, and the January data indicates a significant slowdown in new home construction by builders.

The market's reaction to this data is also quite sensitive. With the decline in housing starts rates, the SPDR S&P Homebuilders ETF declined during trading hours, and stocks of major residential construction companies including D.R. Horton, KB Home, Lennar, Pulte Homes, and Toll Brothers also experienced declines.

However, the US stock market continued to perform strongly in early Friday trading, with the 10-year Treasury yield exceeding 4.3%. There is some uncertainty about future trends in the market, and some economists believe that the significant decline in housing starts rates may be influenced by adverse weather conditions in January. Although builders remain optimistic about the future, housing activity may continue to weaken as mortgage rates gradually rise until the Federal Reserve signals a clearer easing policy.