With spring right around the corner, U.S. home builders are certainly looking forward to the warmer temperatures and the official start of the construction season as starts on new homes took a steep plunge in February.
Construction on new homes in the U.S. fell 17 percent in February, following a flat January, according to preliminary data from the Commerce Department. The department’s previous report indicated a drop of 2 percent in January.
Builders started homes at a seasonally-adjusted annual rate of 897,000 homes in January, a 3-percent decrease from February 2014. This is the first month the rate has dropped below 900,000 homes in the last 12 months.
Single-family starts were down 15 percent to a rate of 593,000 for the month while apartment starts were down 22 percent to a rate of 297,000. The single-family rate is up 0.7 percent over last year at this time while the apartments rate is down 9.5 percent.
Meanwhile, builder confidence in the market fell for a second straight month, down 2 points to a 53, according to the National Association of Home Builders/Wells Fargo builder sentiment index. Any reading above a 50 indicates most home builders believe market conditions are good. The index has hovered in the upper 50s range for the last four months.
NAHB Chairman Tom Woods said his association expects the starts to improve as the spring season starts. However, NAHB Chief Economist David Crowe said the uncertainty of the U.S. construction industry’s skilled worker shortage continues to complicate things for home builders as are lot shortages and tight underwriting standards.
“These obstacles notwithstanding, we are expecting solid gains in the housing market this year, buoyed by sustained job growth, low mortgage interest rates and pent-up demand,” Crowe said.