Nationwide home construction tanked in January, and Bowling Green wasn’t immune.

Construction for new homes and apartments dropped 16.8 percent nationally in January. Compared to the previous two years, construction in Bowling Green is down about 20 percent, but that blow has been softened by previous construction booms, said Anita Napier, CEO of the Builders Association of South Central Kentucky.

“The past couple of years has been an all-time high,” she said. “So we’re still in decent shape.”

As the economy started to slump, the builder’s association cautioned contractors that business would probably drop, and most builders prepared to scale back projects.

“If you’re used to working on five homes and are only working on two, there’s going to be tightening,” Napier said. “Sometimes there’s so much negativity out there, people tend to withdraw and tend to not make that house purchase.”

Compared to the previous year, builder Jody Allen said his business has dropped about 50 percent.

“It’s tough,” said Allen, owner of J. Allen Builders in Bowling Green. “We’ve scaled back to a minimum amount of people in the office. You could tell it (is bad) in the general work force because our phones are ringing every day with people looking for work.”

Allen’s business started construction on about four or five homes in January, and sales picked up in February, he said, attributing the uptick to better weather and a viable local economy.

“I think people are still worried about their jobs,” he said. “But people have heard (bad economic news) for so long that they’re not scared anymore. The economy in Bowling Green is still pretty good and home values in Bowling Green have held their own.”

Brent Wimpee, owner of Southern Kentucky Building & Remodeling, said his remodeling and construction jobs have increased from last year – but the gigs are not as big as they used to be.

“The difference is this year we’ve had more jobs and they’re smaller. Last year’s jobs were a little bit bigger,” he said. “People are saying, ‘Instead of spending X amount of dollars, let’s drop it down a little bit.’ ”

Wimpee said more people are looking to take advantage of low mortgage rates, low material costs and the tax credits for new home buyers in President Barack Obama’s new stimulus package.

The federal plan includes a tax incentive of up to $8,000 for new home buyers. Thirty-year mortgage rates are hovering around 5 percent, and mid-February mortgage rates clocked in at around 4.96 percent, a record low. Those incentives should help boost consumer confidence and encourage them to purchase or build a home, Napier said.

“It is a great time to buy a home, mainly because of the (mortgage) rate,” she said. “It does not get lower than it is right now.”

Napier expects to see an increase in home construction and purchases by the end of the year. The association recently held its annual home expo, which sparked interest from several potential buyers.

And it’s important that interest continues, she said, because home construction is vital to the local economy – 100 single-family homes generate about $13 million for local businesses, $2 million in local tax revenue and about 245 jobs, Napier said.

“It just sets a different tone for the entire community,” she said.