The latest figures from U.S. Department of Housing and Urban Development [1] (HUD) and the Census Bureau [2] on home construction showed nearly 1.3 million overall housing starts in February‒‒a 3 percent uptick from January and a 6.2 percent bump compared to last year. There were 872,000 single-family starts, 6.5 percent above January numbers.
Permits for February were a little more up-and-down. HUD/Census reported a little more than 1.2 million building permits issued overall in February. This is a drop of about 6 percent compared to January, but a 4.4 percent uptick compared to a year prior. At the same time, there were 832,000 single-family permits, which was up 3 percent from January.
The numbers do not impress everyone.
“Neither of these numbers are statistically significant,” said Ralph McLaughlin, chief economist at Trulia [3]. “There is a long way to go before starts and completions are back to normal, with starts 66 percent and completions 60 percent of the 50-year average.”
On the other hand, Marc Waco, U.S. engineering & construction advisory leader at PriceWaterhouseCoopers [4], said that having three consecutive months of just under 1.3M start is “a strong indication of the strength and optimism in the housing sector.”
“We think single family starts will continue to be the driving force in the growth of housing starts throughout 2017,” Waco said, adding that the 6.2 percent drop in multi-family construction from February 2016 was not surprising.
“We continue to see builders focus their efforts on the pent up demand within the single family sector,” he said.
Housing completions totaled more than 1.1 million in February, up 5.4 percent from January and up nearly 9 percent compared to a year ago.
“Homebuyers should be pleased with today’s new construction numbers, as both permits and completions were up in February,” McLaughlin said. “This means a healthy dose of new homes will be available this spring in an otherwise inventory-constrained market.”
But, he added, while “the short run looks good for the housing pipeline,” the fact that permits were down in February is not the best harbinger.
“Permits are important because they are the earliest signals of new supply in the next 6-12 months, so any sign they are falling is something to take note of,” he said.