Housing starts changed only slightly in January, merely rising by 1% following a sharp 15% dip in December. Multifamily starts rebounded by 22% last month after sliding by 39% in December. However, that advance was essentially offset by the tenth straight drop in activity on single-family units. Single-family starts tumbled by 5% in January to an annualized rate of 743,000 units, which is the lowest level since 1991, but there were no signs that the dip in one-family starts will be stopping. RBS Greenwich Capital said that single-family starts in the West were down by a significant 20% to the lowest level on record, which dates back to 1984. It is not clear if the drop was exacerbated by any weather effects, but since October, the region has posted 12%, 10%, 14%, and 20% dips, respectively. One-family starts dipped by 10% in the South, while the rate of activity on single-family homes in the Midwest stayed at its lowest level ever for the second consecutive month, RBS noted. The only positive in the single-family starts series was in the Northeast, where starts jumped back by 44% after dropping in December to the second-lowest reading ever. Furthermore, single-family permits went down by an additional 4% in January to 673,000 units and are down 40% year-over-year. Analysts said that this points to further cutbacks in housing starts in the coming months. Despite the fact that the number of new homes for sale in December was at its lowest level in just more than two years, builders will still decrease construction activity until sales stabilize, which allow them to get a handle on new home inventory. RBS analysts are still expecting home sales to bottom out in the spring. The National Association of House Builder's prospective buyers' traffic gauge bottomed in December and rose in January and again in February to a nine-month high, so housing starts might not level out until at least the 2H08, RBS analysts said.

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