Housing starts fell further in the month of February, according to the latest report from the U.S. Dept. of Housing and Urban Development and the U.S. Dept. of Commerce.
According to the analysis, housing starts fell 8.7% in February 2019 to a seasonally adjusted annual rate of 1.16 million units.
Issi Romem, chief economist of real estate search giant Trulia put today's number into a larger perspective: "The housing market is cooling, as evidenced by declining home sales (despite the last reported month’s resurgence). The decrease in 1 unit permits marks a continued pullback of homebuilders from the market as housing prices approach what could be their cyclical peak, and as the possibility of an upcoming downturn — however mild — looms larger."
"The increase in new multifamily permitting — the overwhelming majority of which will feed into the rental market — continues to indicate that while the for-sale market is cooling off, the prospects for multifamily rental construction are improving, at least in some parts of the country (apparently not in the West)," Romem added.
Single-family production declined a whopping 17% from last month to 805,000 units while multifamily starts came in at a seasonally adjusted annual rate of 352,000 units.
Furthermore, Single-family production declined 10% in 2019 to a rate of 816,800, while multifamily starts came in at 473,000 units.
TIAA Bank Executive Vice President John Pataky said after a January jump in housing starts, this report brings the market back down a peg.
“In this data, we still see the challenges the housing market has been dealing with over the past several months such as price growth and labor constraints,” Pataky said. “While price growth has slowed, it remains higher than wage growth on an annualized basis.”
That being said, Pataky notes the picture in the housing market is not all negative.
“Rates on the 30-year fixed are in a much better position for homebuyers than they were last fall when they touched 5%, and are still very attractive by historical standards,” Pataky continued. “The economic fundamentals remain robust. If buyers decide to take decisive action in this period of flat rates and decelerating cost growth, we could see the market pick up as spring homebuying season gets under way.”
Overall permits retreated 1.6% in February to a seasonally adjusted annual rate of 1.30 million.
Single-family authorizations held steady from last month’s rate of 821,000 permits and multifamily permits came in at an annualized rate of 439,000.