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Prognosis for Housing Solid Despite Decline in Starts

Housing starts slipped 11% in February to a seasonally adjusted annual pace of 1.62 million units. The decline was entirely in single-family houses, which dropped off by 13.7% to a seasonally adjusted annual rate of 1.3 million units, which Seiders said was “still just shy of the stellar 1.36 million-unit rate of single-family housing production” recorded last year.

Multifamily production in February nudged up by 2% to a yearly rate of 327,000 units.

Blame for the decline in new residential construction activity was laid on bitter winter weather across much of the nation, combined with weakness in the economy and job market and pre-war anxieties.

Regionally, activity remained even in the Northeast, with declines of 19% in the Midwest, 9.4% in the South and 11% in the West.

Building permits, often a reliable harbinger of building activity to come, remained in good shape, with a small climb to a solid annual rate of 1.79 million units.

“Given the strong permit numbers we are seeing, the tight inventory situation, healthy house-price performance and especially the favorable interest-rate picture, home builders are in good position to pick up the pace of housing production as today's economic and political uncertainties head toward resolution,” said Seiders.

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