New residential construction in the U.S. showed an unexpected decrease in the month of February, according to a report released by the Commerce Department on Tuesday, although housing starts came in nearly in line with estimates due to an upward revision to the data for January.
The report showed that housing starts fell 1.1 percent to an annual rate of 698,000 in February from the revised January estimate of 706,000. Economists had expected starts to edge up to 700,000 from the 699,000 that had been reported for the previous month.
While housing starts showed an unexpected decrease, the revised figured for January reflected the highest level for starts since October of 2008.
The pullback was largely due to a drop in new construction of single-family homes, with single-family starts tumbling 9.9 percent to an annual rate of 457,000.
On the other hand, new construction of buildings with five units or more, a considerably more volatile number than single-family starts, jumped 28.7 percent to 233,000.
Peter Boockvar, managing director at Miller Tabak, said, "Bottom line, the secular shift toward renting is clearly reflected in the data as vacancy rates continue to fall and landlords gain further pricing power."
"Also, there is little question an unseasonable winter kept construction projects running much more smoothly, just ask any local general contractor," he added.
The report also showed that housing starts in the Northeast fell by 12.3 percent in February, while starts in the West dropped by 5.9 percent.
Meanwhile, housing starts in the Midwest and the South showed modest increases, edging up by 3.0 percent and 1.5 percent, respectively.
The Commerce Department also said that building permits, an indicator of future housing demand, jumped 5.1 percent to an annual rate of 717,000 in February from the revised January rate of 682,000.
The increase exceeded the expectations of economists, who had expected permits to rise to 700,000 from the 676,000 originally reported for the previous month.
With the bigger than expected, building permits reached their highest level since October of 2008.
by RTT Staff Writer
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