Housing starts in the U.S. fell in February from a three-year high, showing the recovery in the residential real estate market will take time to develop.
Builders broke ground on 698,000 homes at an annual rate, in line with the median forecast of economists surveyed by Bloomberg News and down 1.1 percent from a January pace that was stronger than previously reported, Commerce Department figures showed today in Washington. Building permits, a proxy for future construction, climbed to the highest level since October 2008.
The pace of home building was led by a jump in multifamily construction that indicates demand for rental housing is increasing as Americans remain concerned about the prospects for single-family dwellings. Distressed properties and more foreclosures continue to threaten the outlook for property values.
“The housing market continues to recover at a very gradual rate,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto, who forecast a 697,000 pace for housing starts. “The increase in permits likely flags further strength in the months head.”
Stock-index futures held earlier losses after the report as commodities slumped on concern about an economic slowdown in China. The contract on the Standard & Poor’s 500 Index maturing in June fell 0.6 percent to 1,396.2 at 8:45 a.m. in New York.
The median estimate in a Bloomberg News survey called for a rise to 700,000. Estimates of the 80 economists surveyed by Bloomberg ranged from 650,000 to 775,000. The prior month was revised up to 706,000, the highest since October 2008, from a 699,000 pace.
Permits increased to a 717,000 annual pace, the most since October 2008, today’s report showed. They were projected to rise to a 686,000 annual rate, from 682,000 the prior month, according to the survey median.
Construction of single-family houses fell 9.9 percent, the biggest drop in a year, to a 457,000 rate. Work on multifamily homes that include townhouses and apartment buildings last month advanced 21 percent to an annual rate of 241,000.
The February homebuilding data compare with 608,800 housing starts last year, up from 586,900 in 2010 and reflecting gains in multifamily construction. They totaled 554,000 units in 2009, the fewest since record-keeping began in 1959. During the past decade’s housing boom, starts reached a peak of 2.07 million in 2005.