The decline in starts came as Omicron cases surged across the U.S. and wintry weather hampered builders’ progress, according to data Thursday from the Census Bureau and HUD.

Monthly housing starts dipped 4.1 percent in January, to a seasonally adjusted annual rate of 1.64 million, due to a surge in the Omicron variant of COVID and a mercury drop that slowed construction, according to data Thursday from the U.S. Census Bureau and Department of Housing and Urban Development.

Nevertheless, housing starts were up from 1.63 million units, 0.8 percent, from January 2021, the new data shows.

Kelly Mangold, principal at RCLCO Real Estate Consulting, cited the Omicron surge and wintery weather that hampered builders as reasons for the decline. However, she added that a strong 2022 could still lie ahead for builders.

“Despite a somewhat slower start to 2022, builders have continued to make progress on their backlog of homes and consumer demand continues to outpace supply,” Mangold said in a statement. “There is still reason to believe that 2022 will be another strong year for the housing market, and if conditions remain favorable, the market may support another period of sustained growth.”

Single-family housing starts also declined 5.6 percent from December to a rate of 1.12 million. Meanwhile, starts for multifamily buildings of five units of more clocked in at a rate of 510,000, down 2.1 percent from February.

In the Northeast, total housing starts shot up 2.6 percent from December, but single-family starts fell significantly, by 25.8 percent. Overall and single-family housing starts increased by 15 percent or more month over month in the West, while in the South overall and single-family housing starts dropped by single digits. In the Midwest, meanwhile, housing started tanked by nearly 38 percent overall and nearly 29 percent for single-family units.

Permits authorized on privately owned housing units fell 0.7 percent from the month before to a seasonally adjusted annual rate of 1.9 million, but rose 0.8 percent year over year.

Single-family authorizations jumped 6.8 percent from December’s figures to a rate of 1.2 million, according to the data.

Multifamily authorizations in buildings with five units or more dropped a significant 8.8 percent from the month before, to a rate of 629,000.

Privately owned housing completions in January decreased 5.2 percent from December to a seasonally adjusted annual rate of 1.25 million, which was also down 6.2 percent year over year.

Single-family housing completions also took a sizable hit of 7.3 percent month over month to a rate of 927,000.

On multifamily buildings of five units or more, completions remained steady from the previous month at a rate of 309,000.

Buyer demand was strong in January, even as inventory remained low. Whether increasing mortgage rates will impact demand on new homes remains to be seen, since they’re typically pricier than existing homes.

“The housing market is set for a sustained softening over the next few months,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a research note. “Current activity is holding up, but that’s normal at this point in the cycle because would-be buyers rush to lock-in the terms of the mortgage when rates rise. This just pulls forward activity, and leaves a void afterwards.”

Email Lillian Dickerson

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