Housing Starts and Permits Roll Back January Gains

The two principal measures of residential construction activity had been expected to decline a bit in February after a strong performance to kick off the new year.  Instead, the figures reported by the U.S. Census Bureau and the Department of Housing and Urban Development for both construction permits and housing starts were well below even the most pessimistic predictions.

Permits for privately owned residential units were issued at the seasonally adjusted annual rate of 1,298,000.  This is a decline of 5.7 percent from the January rate of 1,377,000 units. Revisions rolled back a substantial portion of the January increase; the original estimate was 1,396,000 units. February's permitting activity was however, still 6.5 percent higher than the 1,219,000-unit rate in February 2017.

Analysts polled by Econoday had expected the February number to come in between 1,300,000 and 1,392,000 units, with a consensus of 1,322,000.  

The rate for single-family authorizations was 872000, down 0.6 percent from the revised (from 866,000) January estimate of 877,000. The February number was 4.6 percent higher than that for February 2017.  Multifamily authorizations, permits for units in building with 5 or more, fell by 14.6 percent to a rate of 385,000, but remained 13.2 percent higher than a year earlier.

On an unadjusted basis there were 90,500 permits issued in February; 61,100 of them were for single-family homes. The respective January numbers were 96,700 and 61,800.

Residential construction starts were at a seasonally adjusted annual rate of 1,236,000, a decline of 7.0 percent from January's rate of 1,329,000 units and 4.0 percent lower than the 1,288,000 starts in February 2017. The January revision increased that month's estimate from 1,326,000.

Analysts had expected starts in the range of 1,256,000 to 1,322,000. The consensus was 1,285,000. 

Single family starts were at an estimated rate of 902,000 units, 2.9 percent above the rate of 877,000 posted in both January and in February 2017. Multifamily starts fell by 28 percent from January and 19.1 percent from the previous February. The annual rate of multifamily starts was 317,000 units.

On a non-adjusted basis construction was started on 85,900 residential units in February compared to 90,200 the previous month.  Single-family starts totaled 62,700, up from 58,000 in January.

Completions did increase, rising 7.8 percent to a seasonally adjusted annual rate of 1,319,000 compared to 1,224,000 (revised from 1,166,000) in January and 13.6 percent above the February 2017 rate of 1,161,000 units.  

Single family completions rose 3.0 percent to an annual rate of 895,000 and were running 17.3 percent ahead of the prior February. Multi-family completions were 21.5 percent higher than the previous month at a 418,000 rate, up 9.4 percent year over year.

On a non-adjusted basis there were 91,100 units completed during the month, up from 84,200. Single-family completions rose from 59,700 to 62,500.

At the end of the reporting period there were an estimated 1,115,000 residential units under construction nationwide.  Single-family units comprised 501,000 of those units.  In addition, there were an estimated 159,000 permits that had been authorized but for which construction had not yet begun.

Permits in the Northeast were issued at a rate 12.7 percent higher than in January and up 13.7 percent on an annual basis. Starts slipped 3.5 percent compared to the prior month and 1.8 percent on an annual basis. Completions were up 41.6 percent and 34.5 percent from the two earlier periods.

The Midwest saw permitting increase by 3.4 percent for the month, but fall 25.5 percent compared to the previous February. Housing starts rose 7.6 percent from January but were off by 14.8 percent from a year earlier. Completions declined by 3.0 percent for the month but were up 33.3 percent on an annual basis.

The South accounted for much of the months national decline in permitting with a 12.4 percent drop.  Authorizations were still up 5.0 percent on an annual basis. The region lagged in housing starts as well, falling 7.3 percent off the January pace and they were down 3.8 percent year-over-year. Completions rose by 10.8 percent and 14.6 percent compared to January and the previous February.

Permits and starts in the West were also lower for the month. Permits were down 3.4 percent, but with a 35.9 percent gain for the year while starts declined 12.9 percent from January but did eke out an 0.6 percent gain compared to February 2017. Completions slipped by 3.2 percent from February and 2.3 percent for the year.