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Housing starts tumble in February


U.S. housing economists have been hoping for a surge in new-home construction starts to ease tight inventory conditions. In February, it didn’t happen.

Overall U.S. housing starts fell from an especially strong January reading, but that decline was driven by a significant drop in apartment building, according to U.S. Census Bureau data released Friday. Single-family housing starts continue to make slow, progressive gains.

constructionAnalysts say an uptick in single-family home building holds the key to relieving housing shortages.

Single-family starts ran at an annual pace of 902,000, which was up 2.9 percent over the month and year over year, and the second highest level in 12 months.  

Overall housing starts, which include duplexes and apartments, ran at an annual pace of 1.24 million, down 7 percent from the January reading and 4 percent below the pace of February 2017. In February, apartment starts fell to 317,000, which was down 28 percent from January and 19 percent from a year earlier.

One caveat about the new-home construction data is that the preliminary estimates are often revised and carry a wide margin of error, especially the regional estimates.

Regionally, single-family starts declined year over year by 4.5 percent in the Northeast and 36.8 percent in the Midwest, but were up 8.7 percent in the South and 24.6 percent in the West.

Economists gave the latest report a mixed assessment.

National Association of Realtors Chief Economist Lawrence Yun called the decline a “movement in the wrong direction.”

“A total of 1.2 million homes were constructed last year, which was vastly inadequate,” Yun said. “Last month’s annualized rate of 1.24 million is only a hair above 2017’s figure.”

First American Chief Economist Mark Fleming said a rise in construction hiring should bode well for increased homebuilding this year.

“February was the best month for residential construction labor growth since August 2008,” Fleming said. 


 

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