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Winter Weather Hurts February Housing Starts

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This year’s extraordinary winter weather took its toll on housing starts in February. After starting off the year on an upward note, housing starts took a 5.9% drop in February, returning to the December 2009 rate, according to data released by the Department of Housing and Urban Development (HUD) and the Commerce Department’s Census Bureau. According to the joint report (download here), privately owned housing starts were at a seasonally adjusted annual rate of 575,000 units in February, down 5.9% from January’s revised estimate of 611,000 and only 0.2% above the February 2009 rate of 574,000. Last month’s estimate was revised from 591,000 to 611,000. The revised December 2009 estimate was 575,000. Single-family housing starts were at a rate of 499,000, down 0.6% from January’s revised rate of 502,000. The February rate for starts in buildings with five or more units was 58,000. Paul Dales, a US economist at macroeconomic research consultancy Capital Economics, said most of the 5.9% fall in US housing starts can be attributed to the severe winter weather that prevented homebuilders from breaking new ground last month. He warned the outlook for home building remains bleak. “[H]omebuilding activity remains very low by historical standards and is set to remain that way for some time,” Dales said. "The problem is that the market is saturated with excess supply." He added: “There are currently 3.8m homes for sale (8.4 months of supply at current rates of sale). Moreover, we estimate that another 5m to 6m homes may yet be foreclosed. In total, that would be 21 months of supply.” Privately owned housing units authorized by building permits -- a future indicator of housing starts -- also declined this month. February's seasonally adjusted annual rate of 612,000 units was down 1.6% from January’s revised rate of 622,000, and 11.3% higher than the February 2009 rate of 550,000. Single-family permits in February were at an annual rate of 503,000, down 0.2% from January’s revised rate of 504,000. Permits for buildings with five or more units came in at a rate of 89,000 units in February, down 11.24% from January's revised rate of 99,000. One increase from January to February was the rate of housing completions. HUD and the Census Bureau said housing completions in February were at a rate of 700,000, up 5.4% above the January’s revised rate of 664,000. This rate is 15.5% lower, however, than the February 2009 rate of 828,000. Single-family housing completions came in at a rate of 458,000, up 4.3% above January’s revised rate of 439,000. The February rate for buildings with five or more units was 236,000, up 14.6% from January’s revised rate of 206,000. Write to Austin Kilgore.

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