We had unusually bad weather in many parts of the country in December, and the conditions in January were extraordinarily warm.
We're certainly seeing a record rate of return in real terms (after factoring out inflation), and there has been very little sign of deceleration. But it is probably inevitable that some of this will slow down.
I've been expecting the housing-production component of GDP to move from a strong growth engine to a neutral or negative element in the U.S. economy over the next year and a half.
We're now in the 'middle innings' of the current economic expansion, and the next economic recession is not yet in sight.
I was obviously delighted to see this rebound. I think what it tells us is that the housing market is still fundamentally strong.
As they generally have done throughout 2005, builders have maintained a healthy balance between supply and demand.
When you start to see cancellations, you really get worried.
We see a flattening of housing starts and the beginning of a cooling process.
The weather basically gave the builders an opportunity to move things forward. No one changed their plans. But I'll probably change my forecasts for the next two months lower, even if I keep the first quarter forecast at pretty much the same level.
The warmest winter weather on record is what is driving a lot of this. I think that is the key factor behind this very strong surge in housing market activity, and as we move forward I think we're going to see these numbers come back down a lot.