Housing Starts Healthier Than Expected

Housing starts for February came in 9.8% above the revised January estimate. Experts say the above-expected growth came largely due to a lack of existing-home inventory available for sale.

The Commerce Department said Thursday that privately‐owned housing starts in February were at a seasonally adjusted annual rate of 1,450,000. While showing month-over-month growth, but is 18.4% below the February 2022 rate of 1,777,000.

Private housing completions were even stronger in February. They were at a seasonally adjusted annual rate of 1,557,000, which is 12.2% above the revised January estimate of 1,388,000 and 12.8% above the February 2022 rate of 1,380,000.  

First American Deputy Chief Economist Odeta Kushi said, “Single-family housing permits, a leading indicator of future starts, also increased 7.6% compared with the previous month. The uptick in single-family housing permits and starts aligns with the recent increase in homebuilder sentiment. [It] increased for the third consecutive month in March, with two of the three components of the index – current single-family home sales and prospective buyer traffic – rising. Conditions are still considered ‘poor’ overall, but the improvement signals cautious optimism.”

Kushi added, “As the inventory of new, completed homes rises, it will provide some much-needed relief to a supply-starved market and put downward pressure on new-home prices.”

Privately‐owned housing units authorized by building permits in February were at a seasonally adjusted annual rate of 1,524,000.  This is 13.8% above the revised January rate of 1,339,000, but is 17.9% below the February 2022 rate of 1,857,000.  Single‐family authorizations in February were at a rate of 777,000; this is 7.6% above the revised January figure of 722,000.