Housing starts plummeted to an annual pace of about 897,000 units in February, down 17% compared to an upwardly revised 1.08 million units in January and down 3.3% compared to about 928,000 units in February 2014, according to estimates released by the U.S. Census Bureau and U.S. Department of Housing and Urban Development.
Single-family housing starts in February were at an annual rate of about 593,000 units, down 14.9% compared to the January rate of about 697,000 units. Multifamily starts were at an annual pace of about 297,000 units, down 21% compared to about 379,000 units.
Building permits, however, increased to an annual rate of about 1.1 million – up 3% compared to the revised January rate of 1.06 million and 7.7% above the February 2014 estimate of 1.01 million.
Most of that increase, however, was for multifamily units. Building permits for single-family homes were at an annual rate of about 620,000, down 6.2% compared to the revised January figure of about 661,000. Permits for multifamily units were at a rate of about 445,000, up almost 20% from about 371,000 permits in January.
Naturally, some of the drop in housing starts was due to harsh winter conditions in the Northeast and elsewhere in the country. However, in a statement, David Crowe, chief economist for the North American Home Builders Association, says, ‘February's numbers indicate that wavering consumer confidence continues to impact the housing recovery. Buyers are waiting for a stronger, more reliable economy before making a home purchase, and builders are responding to their reluctance.’
Crowe adds, ‘Even with this month's drop in production, we expect the housing market to move forward this year in step with an improving economy.’
Regionally, building permits in February were up 7.3% in the South, 6.1% in the Midwest and 2.2% in the West, while the Northeast posted a 17.4% decline.
Earlier this week, the NAHB reported that builder confidence in the market for newly built homes in February fell two points to reach an index score of 53 on the NAHB/Wells Fargo Housing Market Index.