WASHINGTON: A slowdown in building apartments saw US home construction dip in February while the closely watched single-family segment edged higher, the Commerce Department reported Friday.
Housing starts fell in the Northeast, the storm-damaged South and fire-stricken West but rose in the Midwest.
Total new construction for housing fell seven per cent for the month to a seasonally adjusted annual rate of 1.2 million units, a level four per cent below that recorded in February of last year.
The result significantly undershot analyst expectations, which called for a result closer to 1.3 million.
Starts for single-family homes did rise 2.9 per cent.
Construction permits, a sign of supply in the pipeline, also fell 5.7 per cent, with the all-important single-family segment sinking 0.6 per cent.
Officials warn, however, that housing construction data are highly volatile and most of the February figures were well within broad margins of error.
Housing and home-buying drive a significant share of consumer and economic activity, spurring retail spending and investment and a dip in the housing sector can constrain GDP growth.
Analysts say the US housing market is exceedingly tight, given the strong demand produced by the current economic recovery and the slow pace of construction, which has held down supply and driven up prices.
Economists said Friday the February results were disappointing and did not point to an improvement on 2017’s sluggish construction.
Ian Shepherdson of Pantheon Macroeconomics said mortgage applications data suggested a rebound could occur but rising interest rates were likely to dampen homebuyer appetite.
“We still hope for something of a rebound,” he said in a client note, “but we have had to temper our optimism.” “Soaring employment and faster wage growth should support the housing market, but activity is going to be constrained by higher rates.”