By Manuel Gutierrez, Consulting Economist to NKBA
According to the U.S. Bureau of Labor Statistics, February saw a surprising 9.8 percent jump in housing starts (seasonally adjusted), up to a 1.45 million unit annual rate — the highest in six months. However, as has been the case for the last few months, the strong performance was driven by the multifamily sector, which increased 24 percent to a rate of 620 thousand units, the highest in nearly a year.
- The sharp increase in multifamily housing is not necessarily a signal of a recovery in new housing. Just six months ago, multifamily starts rose similarly by 23 percent, only to fall back in the following months.
- Compared to a year ago, February saw an 18.4 percent drop in all housing starts — an annual rate of 327 thousand fewer units. This fall was concentrated in the single family sector, which was down 32 percent year-over-year. In contrast, construction of new multifamily units, which are mostly for rental, was up nearly 10 percent from a year prior.
- When it came to the month over month increase in all housing starts, the Northeast was the only region to see a decline, with 17 percent fewer starts in February than the previous month. Starts in the largest region, the South, rose only 2.2 percent to a 796 thousand unit rate. Additionally, they were 20 percent lower than a year earlier.
- The biggest monthly increase was seen in the Midwest region, where total starts jumped 70 percent to a 201 thousand unit rate. Starts in the West also increased — by a substantial, but smaller, 17 percent to a 347 thousand starts rate.
- February’s sharp increase in all starts obscures the fact that, for the first two months of this year, housing starts were 18.4 percent lower than the same period last year. Construction in that period was only 202 thousand houses — 45 thousand fewer than last year. In February, single family starts were down 50 thousand as compared to a year earlier, though it was up by almost 5 thousand multifamily housing units.
