Construction on new homes in the United States slumped 17% in February, mostly because of heavy snowfall that sidelined builders in the Northeast and Midwest. But nationwide permits for future construction rose to the second highest level since the end of the Great Recession, suggesting construction will pick up in the spring.
So-called housing starts sank to an annual rate of 897,000 in February from a revised 1.08 million in January, the government said Tuesday. That was well below the estimate of analysts polled by MarketWatch, who predicted that starts would total a seasonally adjusted 1.03 million.
New construction in the Northeast tumbled 56% to mark the lowest rate since 2009, with the number of single-family houses being built slipping to a record low, the Commerce Department reported. Builders were frozen out in many major markets such as the Boston that was buried beneath a record nine feet of snow during the winter.
Starts also sank 37% in the frigid Midwest and 18.2% in the West, but just 2.5% in the South, where almost 50% of all new construction takes place.
At the same time, though, permits for new construction, a sign of future demand, rose 3% to an annual rate of 1.09 million. That’s the highest level since October and the second strongest increase since the end of the recession in mid-2009.
Permits rose in all major regions except for the Northeast, where they dropped 17.4%.
The biggest increase in applications for new construction once again involved multi-dwelling projects such as apartment buildings and townhouse rows. Permits for projects of five units or more jumped nearly 20%, reflecting a postrecession trend in which more people are renting instead of owning, especially younger people.
Permits for single-family homes, which make up three-quarters of the housing market, fell 6.2% compared to the prior month. They were up 2.8% from a year earlier, however.