Housing Starts Slide in February But Unusually Bad Weather Was Big Factor

The pace of single-family home production remained virtually unchanged in February with a 0.6 percent decline to a seasonally adjusted annual rate of 499,000 units, according to figures released by the U.S. Commerce Department. Meanwhile, a large decline on the more volatile multi-family side brought the overall number of housing starts down 5.9 percent to a seasonally adjusted annual rate of 575,000 units.

“The single-family numbers are fairly encouraging, in that the level of building activity held firm even as large portions of the country experienced abnormal weather conditions,” said Bob Jones, chairman of the National Association of Home Builders (NAHB) and a home builder from Bloomfield Hills, Mich.

“This latest data indicates that the single-family sector is gradually finding more stable ground, particularly in light of the poor weather conditions that hampered new building activity in two out of four regions last month and the continued difficulties that builders faced in accessing financing for new projects,” said NAHB Chief Economist David Crowe. “With the deadline for purchasers to take advantage of home buyer tax credits fast approaching at the end of April, improvement in single-family building activity was expected and may have continued into early March. Moreover, the very thin inventory of new homes now on the market, the pent-up demand from three-plus years of low household formations and good affordability conditions will provide the platform for a 25 percent gain in new-home construction in 2010 over 2009.”

While the combined pace of single- and multi-family housing starts fell 5.9 percent to 575,000 units in February, that decline was mostly due to a 30.3 percent dip in multi-family starts to a 76,000-unit pace following a double-digit increase on that side in the previous month. Meanwhile, single-family starts held virtually even, with a 0.6 percent decline to a 499,000-unit pace.

On a regional basis, combined starts activity declined 9.6 percent in the Northeast and 15.5 percent in the South, where unusually poor weather conditions were a factor in February. Meanwhile, starts activity posted gains of 10.6 percent in the Midwest and 7.9 percent in the West.

Permit issuance, which can be an indicator of future building activity, declined 1.6 percent overall to a seasonally adjusted annual rate of 612,000 units in February. This reflected a statistically insignificant 0.2 percent decline to 503,000 units on the single-family side and a 7.6 percent decline to 109,000 units on the multi-family side.

Regionally, permit issuance was mixed in February, with the Northeast posting no change, the Midwest posting an 11.7 percent gain, the South registering a 5.8 percent decline, and the West recording a 2.1 percent decline.

New Privately Owned Housing Units Started

(Thousands of units, seasonally adjusted annual rate)

Period Total 1 Unit 5 Units or more Northeast Midwest South West February 2010₁ 575 499 58 66 104 268 137 January 2010₂ 611 502 102 73 94 317 127 December 2009₂ 573 481 79 60 94 309 110 November 2009 579 492 78 63 106 301 109 October 2009 524 471 49 54 99 265 106 February 2009 574 357 204 62 93 306 113

1-Preliminary; 2-Revised; Note: Detail may not add to total because of rounding.

Source: U.S. Bureau of the Census