Housing Starts Down | South Salem Homes

Housing starts slumped in February by the most in four years as bad winter weather in parts of the U.S. prevented builders from initiating new projects.

Work began on 897,000 houses at an annualized rate, down 17 percent from January and the fewest in a year, the Commerce Department reported Tuesday in Washington. The median estimate of 80 economists surveyed by Bloomberg called for 1.04 million.

“It was just the weather, basically,” said Richard Moody, chief economist at Regions Financial Corp. in Birmingham, Alabama. Still, “my view of the recovery in single-family housing is that it’s coming more gradually than others think.”

An increase in building permits was driven by applications for multifamily units, indicating single-family construction, the biggest part of the market, will keep struggling. While stronger hiring and low borrowing costs have helped the industry advance, sales remain challenged by limited supply of cheaper homes and sluggish wage growth.

The median estimate of 81 economists in the Bloomberg survey called for 1.04 million starts. Estimates ranged from annualized rates of 975,000 to 1.08 million after a previously reported January pace of 1.07 million.

Building Applications

Building permits climbed 3 percent to a 1.09 million annualized pace, the fastest since October, after a 1.06 million rate a month earlier. They were projected at 1.07 million, according to the Bloomberg survey median. Permits for single-family dwellings were the lowest since May.

Stock-index futures held losses after the figures. The contract on the Standard & Poor’s 500 Index maturing in June dropped 0.3 percent to 2,063.3 at 8:50 a.m. in New York.

Starts of single-family properties dropped 14.9 percent to a 593,000 rate in February. Construction of multifamily projects such as condominiums and apartment buildings decreased 20.8 percent to an annual rate of 304,000.

New construction slumped a record 56.5 percent in the Northeast and fell 37 percent, the most since January 2014, in the Midwest. Starts also dropped in the South and West, indicating weather was only partly to blame.

The report corroborated data on Monday that showed builder confidence unexpectedly fell in March to an eight-month low. Sentiment decreased in three of four regions, as sales dropped and the outlook for demand stalled, according to the National Association of Home Builders/Wells Fargo.

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http://www.bloomberg.com/news/articles/2015-03-17/home-starts-plunge-on-weather-while-u-s-building-permits-rise