Surprise! Housing Starts Up 22 Percent

After dropping almost 17 percent in January, housing starts surged 22 percent in February to a seasonally-adjusted annual rate of 583,000 — although still 47.3 percent below the revised February 2008 rate — due in large part to the 82 percent increase in the construction of apartment buildings, the Commerce Department said Tuesday. February’s jump in housing starts marked the first increase in eight months and largest percentage gain in 19 years. “We’re inclined to write this off as a weather-related fluke for now,” wrote economists for Wrightson ICAP, according to a Market Watch report. “If the permits series can hold onto its gains in next month’s March report, though, we’ll take it as a sign that new construction has finally found a floor.” The number of single-family housing starts — which excludes apartment buildings — climbed 1.1 percent nationwide from January to February, reaching 357,000. The South lead the way, starting construction on 204,000 single-family homes, while the Northeast started just 37,000 homes. However, the Northeast saw the biggest jump in new home starts from January to February. The West was the only region that experienced a decline, dropping from 83,000 starts in January to 63,000 in February. Building permits, which are less volatile than construction starts, rose 3 percent nationwide in February to a 547,000 annual rate. Permits for single-family homes increased 11 percent to a rate of 373,000 — which is actually the largest percentage gain in 18 years. But despite February’s gain, housing starts are down 47 percent from a year ago and 74 percent from the peak in early 2006. Permits are down 44 percent in the past year. As of March, builder confidence remained unchanged as economic woes continued to take their toll on potential buyers, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released Monday. The HMI held steady at 9 in March, marking a fifth consecutive month of single-digit readings. “Home builders are hopeful that the recent economic stimulus package, and particularly the first-time home buyer tax credit that it included, will have a positive impact on consumer behavior and home sales as the prime home buying season gets underway,” said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. “But it’s still too soon to tell how much of an impact that will be, especially as builders find potential buyers are reluctant because of uncertainty about their future job security and the overall economic outlook.” Write to Kelly Curran at kelly.curran@housingwire.com. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade