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February housing starts down after single-family surge in January


March 26, 2019
By National Association of Home Builders

Total housing starts fell 8.7 percent in February to a seasonally adjusted annual rate of 1.16 million units from an upwardly revised reading in January, according to a report from the U.S. Housing and Urban Development and Commerce Department that was delayed due to the partial government shutdown.

The February reading of 1.16 million is the number of housing units builders would begin if they kept this pace for the next 12 months. Within this overall number, single-family starts fell 17 per cent to 805,000 units following an unusually high reading of 970,000 units in January. Meanwhile, the multifamily sector, which includes apartment buildings and condos, increased 17.8 per cent to 357,000.

“The overall lower starts numbers are somewhat deceiving given the revised single-family starts figure in January was at a post-recession high,” said Danushka Nanayakkara-Skillington, AVP for Forecasting and Analysis at the National Association of Home Builders (NAHB). “Absent the surge last month, the drop in single-family production in February is not as huge as it appears. Still, builders continue to remain cautious due to affordability concerns, as illustrated by the flat permits data.”

“The February starts figures are somewhat in line with flat builder expectations and serve as a cautionary note that affordability factors continue to affect the marketplace,” said Greg Ugalde, chairman of NAHB and a home builder and developer from Torrington, Conn. “Excessive regulations, a scarcity of buildable lots, persistent labor shortages and tariffs on lumber and other key building materials are having a negative effect on housing affordability.”

Regionally, combined single-family and multifamily starts in February fell 29.5 per cent in the Northeast, 18.9 per cent in the West and 6.8 per cent in the South. Starts posted a 26.8 per cent increase in the Midwest.

Overall permits, which are often a harbinger of future housing production, edged 1.6 per cent lower in February to 1.30 million units. Single-family permits held steady at 821,000, while multifamily permits fell 4.2 per cent to 475,000.

Looking at regional permit data, permits rose 1.5 per cent in the Northeast, 4 per cent in the South and 1.1 per cent in the Midwest. Permits fell 15 per cent in the West.