New residential construction returned to positive territory in February after declining the month before, the U.S. Census Bureau and the U.S. Department of Housing and Urban Development said in a press release.
Single-family housing starts jumped 5.7% from January’s revised estimate to 1,215,000, while multifamily starts rose 0.8% to 501,000.
Altogether, the combined construction pace of single-family homes and buildings with five or more units was up 6.8% month over month, at 1,769,000 units. Starts were up 22.3% compared to a year ago.
“More groundbreaking is welcome news for a supply-starved housing market,” First American deputy chief economist Odeta Kushi said. “The number of single-family homes under construction increased to the highest level since 2006. While builders are continuing to push to meet demand, supply-side headwinds slow the home-building momentum at a time when the housing market desperately needs more supply relief.”
The seasonally adjusted annual rate for privately owned housing units authorized by building permits was at 1,859,000 in February, down 1.9% from January but 7.7% higher than a year earlier.
“Permits, a leading indicator of future starts, is down modestly month over month as builders grow concerned about affordability challenges ahead, as rates continue to rise,” Kushi said. “But record low existing-home inventory and millennial demand is supportive of new construction. Of course, builders face persistent headwinds that make it difficult to bring more new homes to the market.”
Privately owned housing completions hit an annual rate of 1,309,000 in February, 5.9% higher than January and 2.8% below a year before.
By region, single-family new construction varied across the U.S. On a month-over-month basis, it surged 65.3% in the Northeast and rose 5.6% and 5.2% in the Midwest and South, respectively. It fell 3% in the West.
“Demand for housing remains high, and it bodes well for a year of continued growth as we move into the spring housing market,” RCLCO Real Estate Consulting principal Kelly Mangold said. “However, it remains important to monitor the situation in Ukraine because significant impacts to the economic climate, interest rates, energy costs and/or amplified supply-chain issues could lead to negative impacts on the U.S. housing industry.”