February's decline in housing starts speaks to continued headwinds to the nation’s housing market.
Housing starts for single-family construction fell nearly 9 percent to 457,000 homes from January to February, according to Commerce Data released today, which reflects continued headwinds to the nation’s struggling housing market.
“Home buyers are more plentiful and serious but continue to struggle with mortgage qualification barriers while builders compete with distressed sales that keep prices soft,” according to Eye on Housing, an online discussion from the National Association of Home Builders or NAHB.
Unseasonably warm weather is also a factor in February’s drop, which followed a 9.9 percent gain in housing starts reported by the Commerce Department for an unusually warn January, said the NAHB. According to the industry group, the three-month moving average for housing starts shows signs of leveling off from an upward trend that began a year ago.
“As the economy and jobs continue to improve, the slowly rising trend set in mid-2011 is expected to continue for a total starts level of 714,000 in 2012,” said Eye on Housing blog.
Housing starts for all types of privately-owned housing, including townhomes and condominiums, fell 1.1 percent to 698,000 from January to February, but are up 34.7 percent from February 2011.
The number of new building permits issued – a forward looking indicator – was up 5.1 percent to 717,000 from January, and a jump of 34.3 percent from the February 2011 estimate.
Housing starts have been averaging around 700,000 for the past four months – about half the historical average of 1.5 million units a year - with multifamily units coming back more strongly than single-family units, said Lawrence Yun, chief economist for the National Association of Realtors, or NAR, an industry group. Rising rents and a 50-year low in the inventory of newly constructed single-family homes should push up housing starts, said Yun, but construction activity is constrained by the continued difficulty in obtaining construction loans.
Yun predicts a 25 percent jump in housing starts for 2012 as banks loosen their hold on huge cash reserves and notes the slight increase in new housing permits suggests an upward trend is developing.
New home construction accounts for a small share of the overall home sales market, notes Yun. Monthly data on existing home sales, which account for about 90 percent of all home sales, is scheduled to be released by the NAR tomorrow.
The Federal Housing Finance Authority (FHFA) is scheduled to release its monthly House Price Index on Thursday. A recent FHFA report showed that home prices were down 2.4 percent in the first quarter of 2012, compared to the same period last year.
Monthly data on new home sales will be released by the Commerce Department on Friday. Sales had fallen 0.9 percent from December to January, but were up 3.5 percent from last January.
To see the latest housing starts report, go to http://www.census.gov/construction/nrc/.