Housing starts in February were at a seasonally adjusted annual rate of 1.42 million, a decrease of 10.3% compared with January and a decrease of 9.3% compared with February 2020, according to the U.S. Census Bureau and U.S. Department of Housing and Urban Development.
Starts of detached single-family homes were at a rate of 1.04 million, a decrease of 8.5% compared with the previous month.
Starts of multifamily properties – five units or more per building – were at an annual rate of 372,000, down 14.5% compared with the previous month.
Building permits also dropped compared with the previous month. They were at a seasonally adjusted annual rate of 1.68 million, down 10.8% compared with January but up 17.0% compared with February 2020.
Permits for single-family homes were at a rate of 1.14 million, down 10.0% compared with the previous month.
Permits for multifamily dwellings were at a rate of 495,000, a decrease of 11.6% compared with the previous month.
Housing completions were perhaps the only bright spot in this month’s report: They were up 2.9% compared with January and were up 5.0% compared with February 2020.
Harsh – and in the case of Texas, totally weird – winter weather played a role in the decrease.
“Housing starts were impacted by the winter storm in February,” says Odeta Kushi, deputy chief economist for First American, in a statement. “Even so, the number of permits issued, a leading indicator of housing starts, were up 17 percent compared with one year ago. Single-family permits were 15 percent higher than one year ago.”
Another factor holding back productivity is the rising cost of construction materials.
“While the desire to build more homes is there, it is being constrained by high costs for materials such as lumber, a dearth of affordable lots, and costly regulations,” Kushi says. “The March home builder confidence index fell to its lowest level since August due to some of these concerns. However, of the three main indicators that make up the overall index, one increased. Single-family sales expectations in the next six months increased by three points, indicating some optimism in the months ahead. Nothing sells like a shortage.
“Also consider the impact of construction labor on the velocity of new home construction, as this is an indicator of long-term future housing supply,” Kushi adds. “The jobs report released earlier this month reported a month-over-month increase of 5,300 residential construction building jobs. The growth in residential construction jobs supports further improvement in the pace of home building because building a home does not readily lend itself to outsourcing and automation. Residential construction employment is easing as a headwind to future housing starts.”
Photo: Todd Kent
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