U.S. new-home construction cooled by more than expected in February on a reversal in the volatile multifamily category, while building remained on pace to contribute to economic growth this quarter, government figures showed March 16.
Highlights of Housing Starts for February
• Residential starts fell 7% to a 1.24 million annualized rate (est. 1.29 million) after 1.33 million pace in prior month.
• Single-family home starts rose 2.9%, second straight gain; multifamily starts fell 26.1% after similar jump the prior month.
• Permits, a proxy for future construction of all types of homes, fell 5.7% to 1.3 million rate (est. 1.32 million) from 1.38 million pace.
Even with February’s decline, the results indicate homebuilding is continuing the progress made last year, with demand supported by a tight job market and steady pay gains.
Mortgage rates remain historically low despite recent increases and consumer confidence is elevated as tax cuts aid disposable income.
The report indicated a tight supply of homes is getting an influx: The number of housing units completed rose to a 1.32 million annualized rate, the highest in 10 years. That may bode well for buyers, as the lack of inventory in recent years has helped reduce affordability.
A gauge of homebuilders’ confidence eased to a four-month low but remained near its highest point in nearly two decades, according to a report on Thursday. Further gains in homebuilding depend on whether certain market factors persist, including a shortage of workers, rising material costs, and what developers say is a lack of buildable lots.
• Single-family home starts rose to a 902,000 rate, highest in three months, from 877,000.
• Groundbreaking on multi-family homes, such as apartment buildings and condominiums, fell to an annual rate of 334,000; data on these projects can be volatile.
• Three of four regions posted a decline in starts, led by West and South; Midwest saw increase
• Report shows wide confidence interval, with a 90% chance that the January figure for starts ranged from a 23.7% drop to a 9.7% gain.
• Report released jointly by the Census Bureau and Department of Housing and Urban Development in Washington.
With assistance by Jordan Yadoo