Single-Family Housing Starts Increased in February, but Coronavirus-Related Challenges Lie Ahead
The economic impact of COVID-19 is putting demand for housing and construction projects at risk.
Total housing starts decreased 1.5% in February from an upwardly revised January reading to a seasonally adjusted annual rate of 1.60 million units, according to a report from the U.S. Housing and Urban Development and Commerce Department. Meanwhile, overall permits declined 5.5% to 1.46 million.
The February reading of 1.60 million starts is the number of housing units builders would begin if they kept this pace for the next 12 months. Within this overall number, single-family starts increased 6.7% to a 1.07 million seasonally adjusted annual rate, the highest level since June 2007. The multi-family sector, which includes apartment buildings and condos, decreased 14.9% to a 527,000 pace.
“Housing starts were strong at the outset of 2020, as builders started production of homes to meet consumer demand at the beginning of the year,” said Dean Mon, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Shrewsbury, N.J. “While these are solid numbers, the report is backward looking. Challenges lie ahead due to broad economic weakening stemming from the coronavirus crisis.”
“As indicated by some of the softening in builder confidence in March, housing construction faces significant headwinds as we enter the spring season,” said Robert Dietz, the NAHB’s chief economist. “With a rising number of economic sectors on a partial or full pause due to coronavirus mitigation, housing demand and the ability to continue full construction of homes is at significant risk.”
Regionally in February, combined single- and multi-family housing production increased 16.7% in the Midwest and 15.2% in the South. Starts fell 41.4% in the Northeast and 18.2% in the West.
Overall permits declined 5.5% to a 1.46 million unit annualized rate in February. Single-family permits increased 1.7% to a 1 million unit rate, while multi-family permits decreased 18.3% to a 460,000 pace. Looking at regional permit data, permits dropped 25.1% in the Northeast, 8.2% in the Midwest, 1.6% in the South, and 2.5% in the West.
Additional details are available at www.nahb.org.