February housing starts spring forward
Following a positive report on the current state of home builder sentiment, the housing industry demonstrated that it’s turning the corner.
Total housing starts in February climbed 10.7% to a seasonally adjusted rate of 1.521 million from the revised January estimate of 1.374 million.
The latest Monthly Residential Construction Report, released this morning by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, is also 5.9% above the February 2023 rate of 1.463 million.
February’s single-family starts jumped ahead by 11.6% to a rate of 1.129 million above the revised January figure of 1,012,000. This also represents a massive 35.2% gain from the February 2023 rate of 835,000.
"The solid level of single-family production in February tracks closely with rising builder sentiment, and with mortgage rates expected to moderate further this year, this will provide an added boost for single-family building,” said Carl Harris, chairman of the National Association of Home Builders (NAHB) and a custom home builder from Wichita, Kan. “But policymakers need to help the industry's supply-chains in order to protect housing affordability and add much-needed supply to boost inventory.”
The February rate for units in buildings with five units or more was 377,000, increasing 8.7% from January’s rate of 347,000. But on a year-over-year basis, multifamily descended by more than 35% from the February 2023 rate of 588,000.
Combined residential permits edged ahead by 1.9% to a seasonally adjusted annual rate of 1.518 million compared to the revised January rate of 1.489 million. The February 2024 report is also 2.4% higher than the February 2023 rate of 1.482 million.
Single‐family authorizations in February increased 1% to a rate of 1.031 million in comparison to the revised January figure of 1.021 million. On a year-over-year basis, single-family permits soared by 29.5%.
“Single-family housing is poised for a good year in 2024 with starts and permits on an upward trend,” said Danushka Nanayakkara-Skillington, NAHB’s assistant vice president for forecasting and analysis. “The uptick in single-family permits is good news for the industry, which was hit hard by tight monetary policy last year. However, builders still face several supply-side challenges in the form of shortages and higher prices for buildable lots and labor.”
Units in buildings with five units or more were at a rate of 429,000 in February, which is a 2.4% gain from the prior month. But permits for buildings with five units or more plummeted by 32.8% on a year-over-year basis.
This new residential construction report follows yesterday’s news from the National Association of Home Builders noting a solid increase in home builder sentiment. The latest NAHB/Wells Fargo Housing Market Index (HMI) revealed that builder confidence had climbed three points to 51 in March.
The latest reading marks the fourth consecutive monthly gain for the index. It is also the first time the sentiment level has surpassed the breakeven point of 50 since last July.
Here’s how single-family housing starts and permits performed on a regional basis in February 2024 compared to the prior month:
In the Northeast, single-family starts jumped by 16.4% and increased 23.2% from a year ago. Permits rose by 3.4% for the month and 19.6% from a year ago.
In the Midwest, starts soared upward by 40.2% and grew 80.5% on a year-over-year basis. Permits saw an 18.3% rise and a 40.% jump from a year ago.
In the South, starts moved up by 16.6% and 32.9% compared to a year ago. Permits decreased by 0.2% but are up 28.4% on a year-over-year basis.
In the West, starts declined 15.4% but are up 23.6% compared to February 2023. Permits are down 5.5% for the month but increased 40% from a year ago.
