Housing Starts Up, Permits Down
Housing starts rose in February, HUD and the Census Bureau reported yesterday, led by a jump in single-family starts.
The report said privately owned housing starts in February came in at a seasonally adjusted annual rate of 1.178 million, 5.2 percent higher than January’s revised 1.120 million and nearly 31 percent higher than a year ago.
Single-family housing starts jumped by 7.2 percent to 822,000, the highest pace since 2007, from January’s revised 767,000. The February rate for units in buildings with five units or more rose to 341,000 from January’s revised 333,000.
Regionally, starts fell only in the Northeast, dropping by more than 51 percent to 73,000 units in February, seasonally adjusted, from 150,000 in January, but still nearly 60 percent higher from a year ago.
In the South, starts rose by 7.1 percent to 615,000 units in February, seasonally adjusted, from 574,000 in January and improved by nearly 21 percent from a year ago. In the West, starts rose by 26.1 percent to 309,000 units from 245,000 in January and improved by 27.2 percent from a year ago. In the Midwest, starts rose by nearly 20 percent to 181,000 units from January’s 151,000 and improved by 77.5 percent from a year ago.
Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., said the report, along with the National Association of Home Builders’ Housing Market Index, suggest that home building may be getting back on track.
“The winter months are a hard time to gauge the strength of the housing market because building activity tails off so much during this time of year and seasonal adjustment factors can lead to huge swings in the monthly data if the weather is a little better or a little worse than it typically is,” Vitner said. “The past month provides an excellent example of this tendency, with February housing starts some 30.9 percent above their year-ago levels, when back-to-back blizzards severely cut into new starts.”
Vitner noted the past winter has been “fairly mild,” although the return of winter weather in the Northeast likely contributed to that region’s 51.3 percent drop in February starts.
“The improvement in single-family starts should put the housing market in good shape going into the key spring selling season,” Vitner said. “Part of the recent stall in the NAHB/Wells Fargo Housing Market Index is likely due to the lack of available inventory to show potential buyers. Builder confidence remains relatively high, particularly in the West. But confidence has slipped a bit in recent months, even though mortgage rates have remained well below 4 percent and mortgage applications for home purchases have risen.”
Vitner also noted the pipeline of new homes coming to the market has improved considerably. “Lending for new residential development has increased and steady gains in household formation have cut the number of vacant homes for sale or rent,” he said. “The number of homes under construction around the country has steadily edged higher over the past year. Apartment projects had accounted for much of the gain in previous years. The momentum now appears to be shifting toward single-family construction.”
Privately owned housing units authorized by building permits in February fell, however, to 1.167 million, seasonally adjusted, a 3.1 percent drop from January’s revised 1.204 million but 6.3 percent higher than a year ago. Single-family authorizations in February rose to 731,000, an 0.4 percent increase from January; multifamily permits fell by 9.1 percent to 401,000 in February from January’s revised 440,000.
Privately owned housing completions in February fell to 1.106 million, 4.2 percent lower than January’s revised 1.060 million but 17.5 percent higher than a year ago. Single-family completions rose by 6.1 percent to 736,000; multifamily completions fell by 25.2 percent to 261,000.
