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Single-family housing starts in February picked up considerably, signaling that homebuilders are feeling bullish about the spring market, according to data released Tuesday by the U.S. Census Bureau,
Housing starts clocked in at a seasonally adjusted annual rate of 1,521,000 in February — 10.7 percent higher than levels in January, and 5.9 percent higher than in February 2023, according to the new data.
“Homebuilders continue to be bullish about the spring market as homeowners are still reluctant to list their homes for sale and new homes account for an outsized share of the active inventory,” Bright MLS Chief Economist Lisa Sturtevant said in a statement. “Prospective home buyers who are looking at new construction are still finding some builders offering concessions, upgrades, or favorable financing terms. But fewer builders are offering price cuts.”
The upsurge in new construction starts comes as homeowners remain locked-in to their lower mortgage rates, and therefore reluctant to list their homes.
The increase in new development was driven completely by single-family construction, which saw starts increase by 35.2 percent from this time last year. Multifamily starts, by contrast, fell by 35.9 percent annually. That slowdown in multifamily construction could mean another big increase in rental prices is on the way, according to Sturtevant.
“The slowdown in multifamily construction suggests that we may start to see rents increase again,” Sturtevant said. “Rents had begun to fall in some markets last year, as record numbers of new apartments hit the market. But apartment construction has probably peaked, which means that rents could be on the rise again this spring.”
The number of housing units authorized by building permits in February climbed 1.9 percent from January to a seasonally adjusted rate of 1,518,000 — 2.4 percent above the rate recorded in February 2023.
Housing completions sat at a seasonally adjusted rate of 1,729,000 — 19.7 percent above January’s estimate of 1,445,000 and 9.6 percent above February 2023’s rate.
Tuesday’s report aligned with Monday’s report on builder sentiment from the National Association of Home Builders, which showed that builder sentiment in the market for single family homes finally passed the break-even score of 50, indicating a positive sentiment.
“The solid level of single-family production in February tracks closely with rising builder sentiment, and with mortgage rates expected to moderate further this year, this will provide an added boost for single-family building,” said Carl Harris, chairman of the NAHB.
