Homebuilding booms

WASHINGTON — Construction of new homes and apartments, defying forecasts of a housing slowdown, shot up in January at the fastest pace in more than three decades.

The Commerce Department reported Thursday that building activity was up 14.5 percent last month when compared to December, pushing construction to a seasonally adjusted annual rate of 2.276 million units.

That was the fastest construction rate since March 1973, but it was expected to be a one-time blip caused by unusually warm weather in January that prompted builders to start work on more homes. Analysts are forecasting that housing construction will slow this year as the nation’s five-year housing boom quiets down.

In other economic news, the number of Americans filing claims for unemployment benefits rose to 297,000 last week, up 19,000 from the previous week. The increase was larger than economists had been expecting but they cautioned against reading too much into the one-week rise. They said the level still remained in a zone that indicates a strong job market.

Ian Shepherdson, chief U.S. economist for High Frequency Economics, said that jobless claims are likely to bounce around quite a bit for a few weeks, reflecting the disruptions in filing claims caused by the weekend’s huge snowstorm in the Northeast.

The weather played a major factor in the big rise in construction last month, which was the mildest January in more than a century. Some economists, however, said that a 6.8 percent rise last month in building permits, which are not affected by the weather, could be a signal that housing activity will not slow as much this year as previously thought as long as mortgage rates do not rise too quickly.

“Low long-term rates and a strong jobs market will continue to provide substantial support to the housing market,” said Bob Walters, chief economist for Quicken Loans, an on-line lender.

The 14.5 percent rise in construction activity in January followed a 6.9 percent drop in December. Analysts had been expecting a rebound but the actual rise was far above their forecasts. Still, they are forecasting that construction of new homes and apartments will decline by about 6 percent in 2006 from last year’s 2.07 million units.