The data for January suggest that home sales and construction continue to be strong. But some economists are beginning to wonder if the unseasonably mild weather across the nation may be inflating the numbers and overstating the industry's strength.

Housing starts fall sharply in the winter as bad weather and cold temperatures slow construction. To compensate for the weather, numbers are adjusted upward-by 40% for the month of January, for example.

But if the weather is milder, that may be too big an adjustment, according to David A. Levy, director of forecasting at the Levy Institute Forecasting Center, Mount Kisco, N.Y. It may be more appropriate to increase the actual January numbers by 30% or 35%, Mr. Levy writes in the institute's latest forecast.

"The underlying trend for housing starts may be completely obfuscated by such variations," he writes.

"This year we believe that starts should be rising in the first quarter, yet the weather effects are likely to be so huge (yet unquantifiable) that gauging how much of that rise is the economy rather than freak weather will be impossible," he says.

He predicts that seasonally adjusted housing activity in the spring will be significantly slower, because the weather-related bounce will have been eliminated. Still, like other economists, Mr. Levy also attributes strong sales to low rates, high employment, and consumer confidence.

Sales of previously owned homes in January rose 0.7% from January 1997, to an annualized rate of 4.4 million homes, the National Association of Realtors said last week.

The trade group's economist, Frederick E. Flick, said mild weather certainly keeps sales brisk. Buyers who started shopping for a home last fall probably kept looking-and buying-through the winter, as they usually do not during harsh winters, Mr. Flick said.

The group is expecting the pace of sales to slow over the year, and forecasts total sales of 4.2 million previously owned homes. That would be just shy of last year's record 4.215 million units sold.

The Midwest is a good example of how winters-harsh or unseasonably mild- can affect economic activity. Sitting in her Chicago office on a 50-degree day last week, Diane C. Swonk, deputy chief economist at First Chicago NBD, said mild weather has depressed sales of snowblowers and heating oil, but helped construction. The early mild weather means builders and buyers have accelerated their activity-they're not waiting until spring to build or buy, Ms. Swonk said. She too expects sales to drop in the spring for that reason.

On Tuesday, the government will release new-home sales data for January, providing another opportunity to see if mild weather is helping housing this winter.

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