The U.S. housing market is cooling off, but economists don’t think this will threaten the economic recovery.

The Commerce Department said today that new housing starts fell more than expected in January as winter weather slowed building activity.

Housing starts dropped 7.9%, says Commerce. The government also lowered its estimate for December to an increase of just 0.6%. Economists had expected housing starts to slip a more modest 4.3% in January.

BMO Nesbitt Burns says that the consensus was looking for something closer to two million units. “Still, this is a record for the month of January,” it notes.

This was the first slowdown in residential construction in five months, RBC Financial reports. And, it notes that starts for the previous month were also revised downward slightly. “January’s decline in starts was broad based across product type and across regions, with starts of both single and multifamily homes dropping during the month,” RBC says.

Building permits held up better, sliding 2.8% in January, which was more or less in line with expectations. The relative strength in permits has economists blaming cold weather for the plunge in starts, rather than a fall in building interest.

“After visiting the stratosphere over the past few months gravity is finally exerting itself as housing market activity begins to moderate from its lofty levels. That said, builder optimism remains strong while new home inventories remain low, suggesting that the moderation expected in housing activity in 2004 will in no way be threatening to the broadening U.S. economic recovery,” RBC concludes.