Construction of new homes plunged by the largest amount in four years as winter weather halted many projects in the Northeast and Midwest, but geography wasn't the whole story because starts fell as well in regions unaffected by snow and frigid temperatures.
Nationwide housing starts skidded 17 percent in February, losing 164,000 to a 897,000 seasonally adjusted annual rate. This is the first print below 900,000 since September 2013 and the largest monthly drop since February 2007. Economists in the Bloomberg survey had forecast 1.04 million after Janauary's 1.07 million.
Building permits showed a different story, rising 3 percent to a 1.09 million annualized pace, the fastest since October, from 1.06 million in January. They had been projected at 1.07 million.
Builders may be hedging their bets, taking out permissions that that they are not obligated to use if the economy does not rebound from the predicted sub-two percent growth in the first quarter. The increase was largely driven by permits for multifamily units, which has been a trend for several years. Applications for single-family homes, the largest part of the market, were the lowest since May.
Weather did indeed pummel construction in half the country. Ground breakings plunged 56.5 percent in the Northeast to 47,000 and 37 percent in the Midwest to 97,000, the most since January 2014.
In the West and South, largely untouched by seasonal storrms and the areas of the greatest activity, new construction dropped 18.2 percent to 239,000 and 2.5 percent to 514,000 respectively.
Across the country, starts of single-family homes tumbled 14.9 percent in February to a 593,000 yearly rate. Constructon on multi-household dwelling plunged 20.8 percent to 304,000.
Today's report from the Commerce Department in Washington complimented information on Monday from the National Association of Home Builders that showed its builder sentiment index unexpectedly slipping to 53 in March from 55 the prior month, missing the 56 forecast. The outlook decreased in three of four U.S. regions as sales fell and demand waned.
The housiing market as a whole is facing an uncertain future. Mortgage rates are relatively inexpensive, the average 30-year fixed rate loan was 3.86 percent last week, according to govenment data, below the 4.26 percent average since the recesson ended in june 2009.
Jobs are also available, last month the economy created 295,000 new positions and the unemployment rate decreased to 5.5 percent, the lowest in seven years.
But the quality of the new positions is suspect, more than half were in the low paying fields of retail, restaurants and other service work. These are not the permanent, well paying work that encourages people to make the long term financial commitment of a home purchase.
In addition, wages have been essentially stagnant for several years. Average hourly earnings added a less than forecast 0.1 percent in February. The annual increase was just 2 percent, equalling the average annual increase since the recession lifted in June 2009, but barely more than the 1.6 percent core inflation rate. Economists consider a rate of healthy wage growth to be around 4 percent.
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