Fewer housing starts were recorded in February, according to the latest figures from the U.S. Commerce Department. Housing starts for single-family and multifamily homes fell by almost 7 percent month-over-month, to a seasonally adjusted rate of 1.24 million units.
For Lawrence Yun, chief economist for the National Association of Realtors, the figures are “a movement in the wrong direction”. He said that one of the keys to economic success at this point in time is the production of more new homes, as this will reduce price appreciation in many markets and boost job creation.
However, the 1.2 million new homes built last year was “vastly inadequate”, Yun said. And with February’s figure being only just above last year’s levels, the prospects for 2018 don’t look so good.
“It’s not enough,” Yun said. “While relaxing regulations on small-sized community banks may spur more construction loans for building, labor shortages in the industry continue to stunt overall activity.”
Multifamily production plunged 26.1 percent in February to a seasonally adjusted annual rate of 334,000 units, while single-family starts eked out a 2.9 percent gain to 902,000 units. Still, rising buyer demand, along with record-low inventory, has prompted calls from many in the real estate industry for builders to add more new homes.
Randy Noel, chairman of the National Association of Home Builders, countered that the difficulty for developers is trying to balance rising construction costs with competitive home prices. Meanwhile, NAHB Chief Economist Robert Dietz says the uptick in single-family production in February follows the organization’s 2018 forecast for gradual, modest strengthening in the new-construction market.
Combined single-family and multifamily home production rose by the highest amount in the Midwest last month, up 7.6 percent month over month. However, housing starts dropped 12.9 percent in the West, 7.3 percent in the South, and 3.5 percent in the Northeast.