Home Construction Vaults in February

Privately-owned housing starts increased 5.9 percent year-over-year in February, according to a U.S. Census Bureau report. The annualized rate of 1.52 million housing starts was also an increase of 10.7 percent from January’s revised estimate.

Single-family housing starts rose by 11.6 percent from January to February. For privately owned housing starts of five or more units, the data was more dispiriting, as they rose 8.6 percent from the prior month (on a seasonally-adjusted basis), but fell nearly 36 percent annually.

Still, the pace of new construction was at its highest level in nearly two years. Zillow senior economist Orphe Divounguy said in a statement that “demographic factors as well as rising inflation-adjusted incomes and wealth continue to support housing demand” as the spring shopping season starts in earnest.

Construction varied heavily by region. In the Northeast and West, housing starts declined from January. The opposite was the case in the South and the Midwest, the latter recording a stunning 50.7 percent rise in housing starts, seasonally adjusted.

Permit applications, an indicator of future construction, rose a modest 1.9 percent from January and 2.4 percent annually. Privately-owned housing completions, meanwhile, increased by 19.7 percent from January and 9.6 percent year-over-year. Single-family housing completions specifically rose 20.2 percent from the prior month.

Divoungay noted that inventory remains a concern in the housing market, saying that homes available for sale are 37 percent below pre-pandemic levels. That has kept price growth going and has forced a majority of builders to offer incentives to buyers, such as a rate buydown.

As of 12:45 pm ET on Tuesday, the S&P Homebuilders Select Industry Index was up 1.6 percent on the day and 12.6 percent year-to-date.