U.S. home construction fell in February by the most in eight months on a drop in single-family home starts, suggesting buyers and builders remain wary despite higher wages and a drop in mortgage rates.
Residential starts slumped 8.7 percent to a 1.16 million annualized rate, below estimates, after an upwardly revised gain in January, according to government figures Tuesday. Permits, a proxy for future construction, dropped 1.6 percent to a 1.3 million rate.
The steeper-than-expected drop and other signs of weakness signals developers continue to struggle to build inexpensive properties as costs rise for materials and labor. Even so, sales have started to bounce back from last year's slump as mortgage rates dip lower and wage gains pick up.
Cold weather also likely contributed to the decline in housing starts in February, while recent flooding in the Midwest might dampen building in that region.
"Today's lackluster release is likely due to poor weather conditions," said Matthew Speakman, an economist analyst at the real estate company Zillow. "The outlook for home construction should improve was we turn the corner into spring, but that could take longer in parts of the country where flooding continues into late March."
Separate reports Tuesday showed mixed results for housing in January. The S&P CoreLogic Case-Shiller index rose 3.6 percent from a year earlier, the least since 2012, while the Federal Housing Finance Agency measure rose 0.6 percent for the best monthly gain in almost a year. Later this week, reports are forecast to show pending home sales cooled in February while transactions for new homes rose.
A gauge of homebuilder shares declined during a broader advance in U.S. stocks.
Some reports have indicated a pickup in housing in the first quarter, with existing-home sales -- which account for about 90 percent of the market -- soaring in February by the most since 2015 and the homebuilder sentiment index rising this year.
Single-family starts slumped the most in four years while permits were unchanged. Starts for multifamily homes, a category that tends to be volatile and includes apartment buildings and condominiums, jumped 17.8 percent as permits fell 4.2 percent.
Three of four regions posted declines, led by a nearly 30 percent drop in the Northeast, where single-family starts dropped the most in four years. The West also declined as the single-family category saw the steepest drop in a decade.
About 195,000 homes were authorized but not yet started in February, little changed from the previous month.
Starts plummeted 29.5 percent in the Northeast. They declined by 6.8 percent in the South and 18.9 percent in the West. Home construction increased 26.8 percent in the Midwest, but the gains came entirely from apartment complexes.
The report, released jointly by the Census Bureau and Department of Housing and Urban Development in Washington, is a week late after delays caused by the partial government shutdown. March data will be released April 19.
Information for this article was contributed by Katia Dmitrieva and Chris Middleton of Bloomberg News; and by Josh Boak of The Associated Press.
Business on 03/27/2019