U.S. Housing Starts Spike 11.2% In February, Much More Than Expected

(RTTNews) - New residential construction in the U.S. rebounded by much more than anticipated in the month of February, according to a report released by the Commerce Department on Tuesday.

The Commerce Department said housing starts spiked by 11.2 percent to an annual rate of 1.501 million in February after plunging by 11.5 percent to a revised rate of 1.350 million in January.

Economists had expected housing starts to increase by 1.0 percent to an annual rate of 1.380 million from the 1.366 million originally reported for the previous month.

"Home builders picked up the pace of construction in February as improved weather in the South offered better conditions for housing starts," said Nationwide Economist Daniel Vielhaber.

He added, "Given the oscillating paces of starts in recent months due to hurricanes and harsh winter weather conditions, a natural pace for starts going forward in the current high-interest rate environment is likely somewhere in between the faster February pace and slower January pace."

The much bigger than expected rebound by housing starts reflected substantial increases by both single and multi-family housing starts.

Single family housing starts soared by 11.4 percent to an annual rate of 1.108 million, while multi-family housing starts shot up by 10.7 percent to an annual rate of 393,000.

Meanwhile, the report said building permits slumped by 1.2 percent to an annual rate of 1.456 million in February after falling by 0.6 percent to a revised rate of 1.473 million in January.

Building permits, an indicator of future housing demand, were expected to tumble by 2.2 percent to an annual rate of 1.450 million from the 1.483 million originally reported for the previous month.

Multi-family permits led the way lower, plunging by 3.1 percent to an annual rate of 464,000, while single-family permits edged down by 0.2 percent to an annual rate of 992,000

A separate report released by the National Association of Home Builders on Monday showed a continued deterioration by U.S. homebuilder confidence in the month of March.

The report said the NAHB/Wells Fargo Housing Market Index fell to 39 in March after slumping to 42 in February. Economists had expected the index to remain unchanged.

With the unexpected decrease, the housing market index dropped to its lowest level since hitting a matching reading last August.