Fewer new homes were started last month, and challenges likely lie ahead for the new-home sector during the coronavirus concerns, the National Association of Home Builders reports.
Total housing starts in February fell 1.5% to a seasonally adjusted annual rate of 1.60 million units, the Commerce Department reported Wednesday. Housing permits—a gauge of future construction—also dropped last month, tumbling 5.5% to 1.46 million.
Still, single-family housing starts were up 6.7% year over year to a seasonally adjusted annual rate of 1.07 million. The drop in housing starts last month was mostly due to the multifamily sector. Multifamily—which includes apartment buildings and condos—dropped 14.9% last month to a pace of 527,000 units. The multifamily sector is down 17% annually.
“Housing starts were strong at the outset of 2020, as builders started production of homes to meet consumer demand at the beginning of the year,” says Dean Mon, chairman of the National Association of Home Builders. “While these are solid numbers, the report is backward looking. Challenges lie ahead due to broad economic weakening stemming from the coronavirus crisis.”
Housing construction faces “significant headwinds” as it enters the spring season, adds NAHB Chief Economist Robert Dietz. “With a rising number of economic sectors on a partial or full pause due to coronavirus mitigation, housing demand and the ability to continue full construction of homes is at significant risk,” he says.
Regionally, combined single- and multifamily housing production in February rose 16.7% in the Midwest and 15.2% in the South. Starts dropped 41.4% in the Northeast and 18.2% in the West.
