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 percent 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 percent 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 percent in the Northeast, 18.9 percent in the West and 6.8 percent in the South. Starts posted a 26.8 percent increase in the Midwest.
Overall permits, which are often a harbinger of future housing production, edged 1.6 percent lower in February to 1.30 million units. Single-family permits held steady at 821,000, while multifamily permits fell 4.2 percent to 475,000.
Looking at regional permit data, permits rose 1.5 percent in the Northeast, 4 percent in the South and 1.1 percent in the Midwest. Permits fell 15 percent in the West.