U.S. home construction just cratered in January, dropping 16%, according to the U.S. Census Bureau.

This comes a day after the National Association of Home Builders housing index for January was released showing a stunning drop in builder confidence.

But not everyone is seeing this sharp drop as a trend.

Sterne Agee chief economist Lindsey Piegza, says she sees fundamentals for a continued steady climb in supply and demand.

“The decline was pretty evenly divided with single family starts down 15.9% from 681k to 573k, while multifamily starts fell 16.3% from 367k to 307k in January. On an annual basis, starts are off 7% for single family but remain in the black for multifamily units up 8.1%,” Piegza said. “Housing permits fell 5.4% in January from 991k to a 937k unit pace, up 2.4% on an annual basis. On a three-month average, permits slipped from 1016k to 982k.”

The bottom line for Piegza is she believes the momentum in the housing market continues to slow but the upward trajectory in both supply and demand remains positive.

“In other words, the recent pullback in demand has not undermined the housing recovery but slowed the pace of activity, a sentiment echoed by yesterday's 10 point decline in the NAHB which suggested a cooling-off of conditions for home purchases and a slowdown in foot traffic,” she said. “Remember, even though housing was the killer of the economy it will not be the savior, contributing less than half of what it once did during the boom years.”