WASHINGTON (AP) – Construction of new homes dipped unexpectedly last month as bad weather hit much of the country. Applications for future projects, however, soared in a sign the industry is ramping up after a debilitating bust.

The Commerce Department said Wednesday construction of new homes and apartments fell 4 percent in December to a seasonally adjusted annual rate of 557,000 from an upwardly revised 580,000 in November.

The results were lower than the 580,000 forecast by economists surveyed by Thomson Reuters. The results were led by declines of 19 percent in the Northeast and Midwest. Construction fell 1 percent in the West, but rose more than 3 percent in the South.

Applications for new building permits, a gauge of future activity, rose 11 percent to an annual rate of 653,000, a far stronger showing than economists had predicted and the highest level of activity since October 2008.

December’s cold weather, especially in the Northeast, was seen as the main reason for the divergent results. “Old man winter might just be to blame for a substantial portion of today’s construction anomaly,” wrote Guy LeBas, an analyst with Janney Montgomery Scott.

Regardless of the cause, “the fact remains that housing is still the weak link in the economy,” wrote Jennifer Lee, an analyst with BMO Capital Markets.

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The industry has dramatically scaled back construction amid the worst housing bust in decades. Thousands of foreclosed homes have been dumped on the market at bargain prices that make it difficult for the builders to compete.

New home construction is down 75 percent from the peak nearly four years ago, but up 14 percent from the bottom last January.

For all of last year, builders started construction on more than 550,000 homes, down nearly 40 percent from a year earlier and lowest on records dating back to 1959.

The report comes after a survey showed builders’ sentiment about the market remains weak. The National Association of Home Builders said Tuesday its index of industry confidence fell in January to the lowest level since last summer. The drop reflects fears that demand for new homes will be sluggish despite the extension of a federal tax credit.

To give a boost to the still-struggling housing market, Congress decided in November to extend the deadline for a tax credit of up to $8,000 for first-time homebuyers until April and expanded it to include $6,500 for existing homeowners who move.