Apartment building construction soared 24 percent in February, lifting new housing starts overall despite a weak month for single-family builds, according to data released Thursday by the U.S. Census Bureau.
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New housing starts inched up in February after falling to a two-year low in January, according to data released Thursday by the U.S. Census Bureau.
Housing starts jumped 9.8 percent to a seasonally adjusted annual rate of 1,450,000 in February, 18.4 percent below the rate seen a year earlier, the new data shows.
February’s gains were driven by increased apartment building construction, with single-family starts increasing by just 1.1 percent compared to the multifamily sector, which increased 24 percent to an annual pace of 620,000.
Housing starts represent the rate of new home construction and paints a picture of future inventory levels.
New building permits for single-family homes rose 13.8 percent in February to a seasonally adjusted annual rate of 1,450,000, 18.4 percent lower than a year ago, according to the Census Bureau.
Housing completions rose 12.2 percent from January, to 1,388,000, and rose 12.8 percent over the February 2022 rate of 1,380,000.
Housing starts increased in all regions excluding the Northeast, where the numbers fell 16.5 percent. Housing starts increased 2.2 percent in the South, 16.8 percent in the West and surged 70 percent in the Midwest, bolstered by a period of rebounding and relatively affordable markets.
While still relatively slim, February’s numbers give hope for a rebound in the new construction sector for later in 2023, experts said, with the gains seen in the early months of 2023 driven primarily by a brief pullback of mortgage rates, which are expected to stabilize later this year.
“Despite persistent supply-side challenges, rising builder confidence is signaling a turning point for home building later in 2023,” National Association of Home Builders Chief Economist Robert Dietz said in a statement. “Starts were up in February given a limited pullback for interest rates. We expect volatility in the months ahead as ongoing challenges related to construction material costs and availability continue to act as headwinds on the housing sector. However, interest rates are expected to stabilize and move lower in the coming months, and this should lead to a sustained rebound for single-family starts in the latter part of 2023.”
NAHB data released Wednesday showed builder confidence logged a two percent increase during February and early March.
While February’s gains were promising, turmoil in the banking industry following the failure of Silicon Valley Bank and Signature Bank could spell trouble for the sector, other economists said.
“The uptick in new starts this month reflects rebounding homebuyer demand and improved builder confidence,” Bright MLS Chief Economist Lisa Sturtevant said in a statement. “However, recent troubles in the banking industry could quash the momentum that has been building up in the new housing sector.”
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