U.S. Housing Starts Decline

There's plainly no lift beneath the housing market. Housing starts last month fell 5.9% to 575,000 units (AR) and reversed January's upwardly-revised gain. Heavy snowstorms likely were a factor contributing to the decline which fell slightly short of Consensus expectations for 570,000 starts.But the lack of forward momentum is further evident in the unchanged level of starts versus one year ago.

Fewer starts of multi-family units accounted for most of the decline in February activity. Starts of apartments, condominiums & town houses fell by nearly one-third from January and were off by two-thirds y/y. Perhaps some sign of a bottoming is that starts during this quarter roughly equal 4Q '09.

Starts of single-family homes didn't quite show that lack of forward momentum. They fell just 0.6% for the month after a 4.4% January increase. What's more starts have risen nearly 40% from the recession low twelve months ago. But they have languished near the current level since mid-2009. Evidence that weather was a factor behind last month's decline is mixed based on the regional figures. Single-family starts fell 14.0% m/m in the Northeast (+32.4%) after a 21.3% January gain but in the Midwest, which also was socked by storms, single-family starts rose 20.8% from January (72.2% y/y). Starts in the South fell 5.7% (+21.0% y/y), a decline at least partially due to storms, and they rose 3.8% (78.7% y/y) in the West.

During February, building permits fell another 1.6% after a 4.7% January decline. Permits to build a single-family home matched the January dip of 0.2% (+32.0% y/y) while starts of 2-4 unit homes were up slightly m/m and y/y. Permits for 5+ unit structures seem to have found a bottom after the earlier decline of three-quarters.