Number of homes under construction falls to new low
WASHINGTON (MarketWatch) - U.S. housing starts fell about 5.9% to a seasonally adjusted annual rate of 575,000 in February as several massive snow storms hit the East and South, according to data released Tuesday by the Commerce Department.
Starts were down in the Northeast and South, but up in the Midwest and West.
Starts of single-family homes fell 0.6% to a 499,000 pace, while starts of large condos and apartment building plunged 43%.
Housing starts were up 0.2% compared with February 2009, the government reported. Starts are down about 75% from the peak in 2006.
The total number of starts masks two separate markets moving different directions. In the past year, starts of single-family homes are up 39%, while starts of multifamily units are down 41%.
The February estimate of 575,000 total starts was in line with the 568,000 rate expected by the median forecast of economists surveyed by MarketWatch. Read our complete economic calendar and consensus forecast.
January's starts pace was revised higher to 611,000 from 591,000 previously reported. Read the full report on the government's website.
Building permits - which aren't as affected by weather events as starts are - dropped 1.6% to 612,000 in February. Permits for single-family homes fell 0.2% to a 503,000 rate. Many economists consider the single-family permits figure to be the most reliable and important number in the release.
Single-family permits are up 32% compared with February 2009.
Over time, permits and starts are highly correlated.
The industry has slashed production of new homes to work off a massive inventory of unsold homes. The number of homes under construction fell 2.2% to a seasonally adjusted 492,000, the lowest on record dating back to 1970.
Builders remain very pessimistic about a recovery, despite a generous tax subsidy for buyers. In March, the home builders' sentiment index dropped back to 15 from 17 in February. Builders face tough competition from foreclosures of existing homes, and buyers remain cautious about the job market.
The government cautions that its monthly housing data are volatile and subject to large sampling and other statistical errors. In most months, the government can't be sure whether starts increased or decreased. In February, for instance, the standard error for starts was plus or minus 10%. Large revisions are common.
The standard error for monthly building permits data is much lower at plus or minus 1%.
It can take four months for a new trend in housing starts to emerge from the data. In the past four months, housing starts have averaged 585,000 annualized, up from 572,000 in the four months ending in January.
