Dive Brief:
- Housing starts rose 3% in February to a seasonally adjusted annual rate of 1.288 million from January's upward-revised estimate of 1.251 million, the Commerce Department reported Thursday. February's figure is 6.2% ahead of the February 2016 rate.
- Building permit authorizations, an indicator of future construction activity, changed course in February, declining 6.2% from January's upward-adjusted rate of 1.293 million to 1.213 million, but still coming in 4.4% above the year-ago mark.
- Single-family starts swung up 6.5% to 872,000 from January's 819,000 and came in 3.2% ahead of February 2016's figures. Multifamily starts continued to decline, falling 6.5% from January's 429,000 to a rate of 396,000 starts in February. Still, multifamily starts are 11.2% ahead from a year earlier.
Dive Insight:
February's numbers narrowly beat analyst predictions, reflecting the second-highest rate of starts since 2007, according to MarketWatch. The uptick in starts is a good sign for the housing market's recovery, pointing to healthy demand and a slow but steadying stream of supply coming online to meet it.
While building permit authorizations and multifamily starts cooled for the month, the surge in single-family starts and 12-year high in builder optimism bodes well for steady growth in the market. As the multifamily market continues to stabilize after a period of skyrocketing growth, economists are pinning optimism for future growth on the single-family sector.
Still, analysts say increases in material costs, rising mortgage rates and the continuing lot and labor shortage could be a drag on project starts and completions throughout the year.
