February building permits jump to highest level since October 2008
By Jeffry Bartash, MarketWatch
WASHINGTON (MarketWatch) — U.S. builders started construction on new homes in February at a slightly slower pace, government data showed Tuesday, but the biggest increase in permits in 3 1/2 years indicates work will pick up in the coming months.
Housing starts fell 1.1% to an annual rate of 698,000 last month, compared with an upwardly revised 706,000 in January, the Commerce Department said.
Economists surveyed by MarketWatch had expected housing starts to rise to 706,000 from an original reading of 699,000 in January. The data are seasonally adjusted.
New construction of single-family homes, which account for three-quarters of the housing market, dropped nearly 10% to an annual rate of 457,000. Construction of single-family homes is still running 18% higher compared against a year ago, however.
Work on multi-dwelling units — apartment buildings and the like — jumped nearly 29% to an annual rate of 233,000.
Permits to begin new construction, meanwhile, climbed 5.1% last month to an annual rate of 717,000 — the highest level since the middle of the last recession in October 2008.
Single-family home permits increased 4.9% to an annual rate of 472,000. Permits for condominiums and apartments rose a smaller 3.3% to a rate of 219,000.
Permits, which have been gradually increasing since last fall, give an indication of whether demand for new homes is growing or slowing.
New construction increased 3% in the Midwest and rose 1.5% in the South, but activity fell by 12.3% in the Northeast and by 5.9% in the West.
Although the housing market remains in a deep slump — the worst since the government began record-keeping in the early 1960s — evidence is beginning to emerge of a thaw. Sales of new and existing homes have been on the rise since the end of the last summer.
Most economists expect the housing market to continue to recover in 2012, but at a very slow pace. Barring a major acceleration in U.S. economic growth, they say, it could take several years or longer for the housing industry to fully recover.
In a healthy economy, housing starts should average 1.5 million or more each year, analysts estimate.
The benefits of a healthy housing industry are widespread. Huge amounts of raw materials and finished goods are required to build homes and furnish them after sale, for example, and the construction trade employs millions of workers directly or indirectly.
Because of sharp fluctuations in housing-starts data, economists say it can take several months to detect new trends. In the past four months, housing starts have averaged an annual rate of 697,000. That’s the best stretch of home building since the final months of 2008.
