Housing starts declined in February despite a strong showing in the previous month, according to the latest new residential construction data published by the Census Bureau and the U.S. Department of Housing and Urban Development on Tuesday.
The report indicated that housing starts in February were at a seasonally adjusted annual rate of 1.16 million, decreasing 8.7 percent month-over-month and 9.9 percent on an annual basis. Single-family housing starts also weakened decreasing 17 percent to 805,000 in February compared with 970,000 in the prior month.
"A spike in mortgage rates in early November undermined buyer purchasing power and caused a dip in builder confidence that has started to recover but has yet to reach its October level, before the surge in mortgage rates," said Danielle Hale, Chief Economist, realtor.com. "Thus, we may see a few more months of up and down single-family starts before increasing confidence leads to increased production."
Building permits during the month also saw a decline of 1.6 percent over January, decreasing to 1.29 million against 1.31 million recorded in the previous month. Permits also fell on a year-over-year basis by 2 percent from 1.32 million recorded in February 2018. The report revealed that single‐family authorizations in February remained unchanged at were at a rate of 821,000 on an annual basis.
However, housing completions increased in February, rising 4.5 percent to 1.3 million compared with 1.24 million completions in January. Completions were also slightly above the February 2018 numbers rising 1.1 percent on an annual basis.
Looking at the buying season ahead, Hale said that the current market conditions provided plenty of opportunities for homebuyers. "Mortgage rates have dipped notably since the November surge and signs point to steady to lower mortgage rates ahead," Hale said. "Home prices continue to rise, but their moderation puts them within range of stronger income growth creating opportunities for homebuyers, where we previously saw hurdles."