Mar 21 2005
The appeal of homeownership continued to drive the housing market in February as single-family housing starts set a new all-time record and multifamily construction was buoyed by the condominium market.
Total housing starts increased by 0.5 percent to a seasonally adjusted annual rate of 2.195 million units, setting a new 21-year-record for the second month in a row, the U.S. Commerce Department reported today. The February construction pace was also 15.8 percent above a year ago. “Builders are reporting that there is still plenty of traffic in their sales offices,” said Dave Wilson, president of the National Association of Home Builders (NAHB) and a custom home builder from Ketchum, Idaho. “Mortgage rates, employment, household income and other favorable market conditions continue to drive demand.” “Homeownership continues to plow ahead,” said NAHB Chief Economist David Seiders. “Builders are reacting to strong demand in the single-family home and condominium markets, both of which continue to cry out for supply. Stronger job prospects also are fueling the rental market.”
The rate of single-family home construction reached 1.775 million units, a new record for the second month in a row. The pace was 0.3 percent above the January rate and 16.7 percent above February 2004. Multifamily housing starts increased to a seasonally adjusted rate of 420,000 units in February, 1.7 percent above the January pace and 12.3 percent above a year earlier. “It’s perfectly clear that housing will remain an important component of GDP for the first quarter of the year. There’s no question that the housing market is still an engine of economic growth,” Seiders said. “However, we do expect housing to plateau as the year progresses, other components of the economy pick up more steam and the interest rate structure moves up further.”
Construction of new homes and apartments increased in the Northeast by 19.1 percent and in the Midwest by 20.4 percent for the month, the two regions that were hit hardest by winter storms the month before. Construction in the South declined by 8.1 percent, following an 18 percent surge in January, and starts increased in the West by 0.7 percent in February. Issuance of total building permits decreased 2.7 percent from January’s robust pace to a seasonably adjusted rate of 2.074 million units.