Builders were challenged in February by ongoing pressures and unfavorable weather.
According to the Commerce Department, builders churned out a disappointing 1.16 million housing starts, down 8.7 percent from January—which posted a windfall—and 9.9 percent year-over-year. Of the 1.16 million housing starts, 352,000 were multifamily and 805,000 were single-family—the latter lower by an overwhelming 17 percent.
Approvals for builds declined 1.6 percent from January and 2 percent year-over-year, at 1.3 million permits. Approvals in the single-family space totaled 821,000, no different than in January, and approvals for multifamily starts totaled 439,000.
Completions were at an encouraging 1.3 million, 4.5 percent higher than in January and 1.1 percent higher year-over-year. Completions in the single-family space struggled, however, at 816,000, down 10 percent from January. Completions on multifamily starts totaled 473,000.
“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 the National Association of Home Builders (NAHB), in a statement. “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.”
“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 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.”
“Winter weather had an impact on home construction in February, with housing starts taking a step backward from the momentum of January’s report,” said Matthew Speakman, economic data analyst at Zillow, in a statement. “Many attributed January’s strong release—which broke a streak of four straight monthly declines and improved market conditions for buyer —specifically to mortgage rates retreating from multi-year highs, a recovering stock market and a less ambitious interest rate outlook.
“This lackluster release is likely due to poor weather conditions, which led to a decline in construction activity and jobs from the month prior,” Speakman said. “What starts activity there was was driven largely by the volatile multifamily sector. The outlook for home construction should improve as we turn the corner into spring, but that could take longer in parts of the country where flooding continues into late March. Permits have shown strong increases in the past few months, and rosy market conditions remain.”