In the wake of a surge in homebuilding activity at the end of 2012, residential construction activity edged lower in January.
Last month, the nationwide construction rate fell 2.1 percent from December to a seasonally adjusted rate of $883.3 billion, according to real estate records from the U.S. Census Bureau. Despite the month-over-month decline, the rate was still 7.1 percent above where is was in January 2012.
"The latest report is positive for housing overall but negative for the public sector and nonresidential," said analysts at Econoday. "The first likely is being supported by low mortgage rates and low supply.
A drop in residential construction could yield a smaller property inventory in the coming months, which would be negative for prospective buyers, as they could find themselves with limited options.
A recent drop in fixed mortgage rates could contribute to the increased interest. Most recently, during the week ending February 28, mortgage records indicate the average rate for a 30-year FRM fell to 3.51 percent, down from 3.56 percent, according to Freddie Mac. Meanwhile, 15-year FRMs averaged 2.76 percent, which was a slight decline from 2.77 percent a week earlier.