Some telling economic news out of the U.S. concerning the housing market.
The latest government data shows that new home groundbreakings in the U.S. fell in February for the first time in eight months, with a steep drop recorded for single-family homes. The news suggests that homebuyers and builders remain cautious despite higher wages and a recent drop in mortgage rates.
U.S. residential house starts fell 8.7% to a 1.16 million annualized rate in February, below estimates, after an upwardly revised gain in January, according to federal government figures released Tuesday morning. Building permits, a proxy for future construction, fell 1.6% during the month.
The steeper-than-expected drop signals that developers continue to struggle to build affordable properties amid rising costs for materials and labour. Some reports have indicated a pick-up in U.S. housing in the first quarter, with existing home sales — which account for 90% of the market — soaring in February by the most since 2015 and homebuilder sentiment increasing.
However, other reports on the industry are likely to be more mixed. Home price data for January, due later on Tuesday, are expected to show the smallest gains since 2012. Later this week, reports are forecast to show pending home sales cooled in February.
Single-family house starts in February slumped the most in four years while permits were unchanged. Starts for multifamily homes, a category that tends to be volatile and includes apartment buildings and condominiums, jumped 17.8% as permits fell 4.2%. Three of four regions posted declines, led by a 30% drop in the Northeast, where single-family starts dropped the most in four years. The Western U.S. also declined as the single-family category saw the steepest drop in a decade.
