Multifamily Slowdown Pushes Down Total U.S. Housing Starts in February
Yet, Single-family Home Construction Picks Up Pace
According to the U.S. Department of Housing and Urban Development and the Commerce Department, a decline in multifamily starts pushed overall housing production down 7.0 percent in February 2018 to a seasonally adjusted annual rate of 1.24 million units.
Multifamily production fell 26.1 percent to a seasonally adjusted annual rate of 334,000 units after an exceptionally high January report. Meanwhile, single-family starts posted a 2.9 percent gain to 902,000 units.
"The uptick in single-family production is consistent with our builder confidence readings, which have been in the 70s for four consecutive months," said NAHB Chairman Randy Noel. "However, builders must manage rising construction costs to keep home prices competitive."
"Some multifamily pullback is expected after an unusually strong January reading. Multifamily starts should continue to level off throughout the year," said NAHB Chief Economist Robert Dietz. "Meanwhile, the growth in single-family production is in line with our 2018 forecast for gradual, modest strengthening in this sector of the housing market."
Regionally in February, combined single- and multifamily housing production increased 7.6 percent in the Midwest. Starts fell 3.5 percent in the Northeast, 7.3 percent in the South and 12.9 percent in the West.
Multifamily weakness pushed overall permit issuance down 5.7 percent in February to a seasonally adjusted annual rate of 1.3 million units. Multifamily permits fell 14.8 percent to 426,000 while single-family permits were essentially unchanged, edging down 0.6 percent to 872,000.
Permit issuance rose 12.7 percent in the Northeast and 3.4 percent in the Midwest. Permits declined 3.4 percent in the West and 12.4 percent in the South.
The National Association of Realtors Chief Economist Lawrence Yun commented, "The fall in housing starts in February is a movement in the wrong direction. The key to economic prosperity at this juncture of economic expansion is to produce more new homes. That will help with job creation and reduce the swift price appreciation in several markets.
Yun continued, "A total of 1.2 million homes were constructed last year, which was vastly inadequate. Last month's annualized rate of 1.24 million is only a hair above 2017's figure. It's not enough. While relaxing regulations on small-sized community banks may spur more construction loans for building, labor shortages in the industry continue to stunt overall activity."