US housing starts fell by 14.8% in January from December, marking the worst monthly drop since April of 2020. According to the US Census Bureau, housing starts fell to 1.33 million in January, down from the revised 1.56 million in December. The biggest reason for the decline is likely inclement winter weather.

Yahoo Finance Reporter Dani Romero joins the Live show to break down the latest development for the housing sector and what it could mean moving forward.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Nicholas Jacobino

Video Transcript

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MADISON MILLS: US housing starts fell by the largest amount since April 2020 this January, signaling a slow recovery for the real estate sector as buyers wait to see mortgage rates lower. Let's bring Yahoo Finance's Dani Romero in to give us the details. Dani, what are you looking at most this morning?

DANI ROMERO: The drop in housing starts last month really reflects the wintry weather rather than a pullback in builder confidence. Remember, builders need good weather to build and so that does complicate the situation in the wintry months. So let's dive into those numbers.

Housing starts reached an annualized rate of 1.33 million units and that was lower than December's 1.46 million units. And that drop really was led by multifamily, which a lot of experts that I've spoken with really believe that this area will continue to be really the sore spot as there's been so much supply under construction. Single-family starts slowed last month, but it's still pretty intact there.

Moving over to the building permits, a good indicator of future construction projects, that dropped to a 1.5 million annualized rates. And permits for single family edged up while multifamily permits fell by nearly 8%. That was the most since September.

But another thing to really point out from this government data is that the biggest drop in housing starts also came from the regions that were hit by winter storms. So for example, in the Northeast, housing starts were down by 20% month over month. So looking ahead, economists expect that single-family starts will gain their momentum this year, the fact that there has been so much demand in the new home market. And because of that demand really we have to give it to the builders because the publicly traded builders have been offering these nice, juicy incentives for buyers.

RACHELLE AKUFFO: Indeed. We know they don't last forever.