New construction of residential homes came in strong in February, with a large concentration of the gains on the single-family side. Homebuilders continue to feel confident about the spring market as demand for new construction remains robust.
Privately owned housing starts grew to a seasonally adjusted annual rate of 1.521 million units, up 10.7% month over month and up 5.9% year over year, according to a report released Tuesday by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development (HUD).
Single‐family housing starts in February climbed 11.6% to a rate of 1.129 million units, while multifamily starts also ticked up to 377,000 units.
In recent months, fewer builders have been offering price cuts, according to the most recent National Association of Home Builders (NAHB) survey.
“It is possible that we could see more wiggle room on pricing in the coming months, as the inventory of existing homes begins to expand,” Bright MLS chief economist Lisa Sturtevant said in a statement.
While single-family starts were 35.2% higher than they were last year at this time, starts for new multifamily buildings (five or more units) fell by 35.9%.
“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 rate at which building permits were issued in February also improved. It climbed by 1.9% month over month to a seasonally adjusted annual rate of 1.518 million. It was also up year over year by 2.4%.
Notably, the number of single-family authorizations was up 1% month over month in February to a rate of 1.031 million units, its highest level since May 2022. Meanwhile, multifamily authorizations also improved to a rate of 429,000 units.
Housing completions also drastically improved in February compared to January, climbing 19.7% to 1.729 million units. Single‐family completions rose by 20.2% between January and February, to a rate of 1.072 million. Meanwhile, multifamily completions came in at a rate of 644,000 in February.
On a regional basis, combined single-family and multifamily starts were 10.3% lower in the Northeast compared to January, 50.7% higher in the Midwest, 15.7% higher in the South and 7.9% lower in the West. Meanwhile, permits were 36.2% higher in the Northeast, 3.8% higher in the Midwest, 1.3% lower in the South and 6.8% lower in the West.