New-home construction exceeded forecasts in February, underscoring momentum in the industry a month before the coronavirus pandemic injected uncertainty into the economy.
Residential starts decreased 1.5% to a 1.599 million annualized rate, from an upwardly revised 1.624 million pace in January, according to a government report released Wednesday. The median forecast in a Bloomberg survey was 1.5 million. Applications to build, a proxy for future construction, declined 5.5% to a 1.46 million rate on fewer permits for multifamily units.
The figures underscore robust housing demand in advance of an acceleration of U.S. coronavirus cases that spawned business closures and layoffs. Despite a slump in mortgage rates, a deterioration in the job market will probably weigh on demand and eventually limit residential construction.
Single-family starts increased to an annualized 1.07 million pace, the strongest since June 2007. Starts of multifamily homes, a category that tends to be volatile and includes apartment buildings and condominiums, declined for the first time since September.
New-home construction increased in the South, the largest region, rose to the strongest level since September 2006. Starts also rose in the Midwest. New building of one-family homes rose in all areas but the West.
Building permits for single-family homes topped a 1 million pace for the first time since May 2007.
Private data released Tuesday showed sentiment among homebuilders fell to a four-month low in March as expectations for sales in the next six months declined. However, the National Association of Home Builders chief economist Robert Dietz said the rising economic impact of the coronavirus will likely be reflected more fully in the April report.