Total housing starts posted an increase in February, with a solid gain for single-family construction and ongoing elevated levels of multifamily development. Total starts were up 3%, rising to a 1.288 million seasonally adjusted annual rate, according to the joint data release from the Census Bureau and HUD.
Single-family starts recorded a monthly increase of 6.5% in February, rising to an 872,000 annual rate, the fastest annualized pace since the fall of 2007. Single-family permits were up 3.1% in February, also posting the fastest rate in almost 10 years. Unseasonably warm weather for much of the country in February certainly helped home construction during the month.
As measured on a three-month moving average, the current changes are consistent with recent trends in the NAHB/Wells Fargo measure of single-family builder confidence. NAHB is forecasting continued growth for single-family construction in 2017.
Multifamily starts realized a decline in February, although production remains elevated. Total multifamily starts fell 3.7% to a 416,000 seasonally adjusted annual rate. However, multifamily permits fell almost 22% from an accelerated rate recorded in January. NAHB is forecasting that multifamily development to continue to level off over the course of 2017.
Focusing on housing’s economic impact, 58% of homes under construction in February were multifamily (637,000). This multifamily count is almost 14% higher than a year ago. There were 454,000 single-family units under construction, a gain of 6% from this time in 2016. This is the highest count of single-family units under construction since the fall of 2008.
Regionally, single-family starts posted significant month-over-month gains in all regions except the South, where the pace of monthly construction was down almost 3% from the January rate. Single-family starts were up 17% in the Northeast, 20% in the Midwest and 17% in the West, relative to the rates recorded in January.
Today’s numbers are consistent with NAHB’s 2017 forecast, which indicates continued growth for single-family construction (limited by availability of workers and lots) and continued leveling off of multifamily production in the year ahead. Changes in building material prices are also an issue to watch.