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Big January drop in volatile housing market

Washington -- With the U.S. housing market still in a daunting state of flux, whipsawing from one extreme to another, housing starts tumbled by 14.3% during January from December levels as the nation's home builders worked off their inventories of unsold homes.

The U.S. Department of Commerce said the pace of home building slowed to a seasonally adjusted annual rate of 1.4 million units, plunging 37.8% from year-ago levels.

"Home sales apparently stabilized late last year, but the overhang of unsold housing inventory still is quite heavy," said David Seiders, chief economist of the National Association of Home Builders. With a large stockpile of houses still on the market, he said, "Builders have been cutting back on starts of new units to bring supply and demand back into balance. We expect housing starts to bottom out in the first quarter of this year before embarking on a gradual recovery path."

Illustrating the volatility and wide swings that characterize today's housing market, starts of apartment and condominium construction fell 24.1% in January, after racing ahead by 34.4% in December.

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