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New Home Construction Slips a Bit in February

by Peter Thomas Ricci

The nation’s construction sector continued to bump along in February, with all measures putting out lukewarm numbers.

census-bureau-new-home-construction-housing-starts-building-permits-housing-completions-multifamily-housing-single-family-homes-jed-kolko-trulia

Another month, another around of lackluster construction numbers from the U.S. Census Bureau.

According to the Bureau’s latest report, housing starts were down 0.2 percent from January to February, finishing the month at a seasonally adjusted annual rate of 907,000; that’s also 6.4 percent below Feb. 2013’s rate, and though single-family home starts were up 0.3 percent monthly, they were down 10 percent from a year ago.

Meanwhile, the nation’s zeal for multifamily construction continued, with starts for buildings with five units or more jumping 9.4 percent from Feb. 2013; after hitting a 15-year high in 2013, it seems multifamily has lost none of its luster.

What’s to Blame for February’s Construction Numbers?

So, where can the blame game begin for February’s numbers? Before anyone starts pointing fingers, here are some things to keep in mind:

  • February’s report was not all bad. Building permits, for example, were up 7.7 percent from January and 6.9 percent from Feb. 2013; however, those increases were largely driven by the multifamily sector, where permits skyrocketed 28.8 percent from last year (single-family authorizations, meanwhile, were down 1.8 percent from January).
  • Also, housing completions finished February at a rate of 886,000, which is up 4.4 percent monthly and 21.9 percent yearly to its highest mark in five years.
  • Still, February’s numbers on construction starts are disappointing, and we can’t blame the weather; as Jed Kolko, Trulia’s chief economist, noted this morning, February temperatures were near or above normal in the South and West, and three quarters of the nation’s starts are in those two regions.
  • Similarly, Kolko noted that starts are pretty much flat when you look at three-month averages – from December to February, single-family starts are down 3 percent, while multifamily is up 4 percent.

In the end, February’s report was perhaps best summarized by Kolko in this manner: “Home construction is clearly recovering, but recently looks more like a drunken stagger.”

Check out the chart below for a visual representation:

single-family-home-construction

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