Housing starts in the United States were little changed in February after declining a month earlier, indicating the home-building industry is stabilizing after bad winter weather curbed construction.
The 0.2 percent decrease to 907,000 homes at an annualized rate last month followed a revised 909,000 pace in January, figures from the Commerce Department in Washington showed Tuesday.
Warmer temperatures, a pickup in demand during the spring selling season and limited housing supply may help fuel further gains in new residential construction.
The outlook for the industry later this year depends on whether hiring picks up enough to overcome higher mortgage rates and home prices.
“We will see improvement as the year goes on and weather improves,” said David Sloan, a senior economist at 4cast Inc. in New York.
“The pace of increase will be fairly moderate. It suggests we’re going to get respectable economic growth, but maybe not a strong acceleration,” Sloan said.
The February pace was the slowest in four months.
Permits filed for future projects increased 7.7 percent to a 1.02 million pace in February, the most since October and reflecting a surge in applications for apartment-building construction.
One-family home-building permits dropped for a third straight month to the lowest level in a year.
Work on single-family houses rose 0.3 percent to a 583,000 rate in February from 581,000 the prior month.
Construction of multifamily projects such as condominiums and apartment buildings decreased 1.2 percent to an annual rate of 324,000.
Two of four regions showed increases in groundbreaking last month, led by the Midwest and South.
February ended with its coldest final week since 2003, according to Berwyn, Pa.-based weather data provider Planaytics Inc., The second week of the month was the snowiest such period since 2007.
Confidence among U.S. homebuilders rose in March, with more builders reporting bad conditions than good.
The National Association of Home Builders/Wells Fargo index of builder confidence climbed to 47 this month from 46 in February, a report from the Washington-based group showed Monday.
Readings below 50 mean more survey respondents signaled poor market conditions.
Beyond weather, borrowing costs have increased for buyers.
The rate on a 30-year fixed mortgage from Freddie Mac rose to 4.37 percent in the week ended March 13, up from 3.63 percent a year earlier.
Homebuilder Hovnanian Enterprises Inc. (NYSE: HOV), which reported a wider loss for its fiscal first quarter as inclement weather extended construction times and slowed demand, sees better times ahead for the industry.
“We believe this is a temporary pause in the industry’s recovery,” Ara Hovnanian, chief executive officer New Jersey’s largest homebuilder, said on March 5.
“Based on the level of housing starts across the country, we continue to believe the homebuilding industry is still in the early stages of recovery.”
Lean inventories will probably keep builders busy.
A report from the Commerce Department last month showed the months’ supply of new homes declined to 4.7 in January, the fewest since June, from 5.2 at the end of 2013.
Lowe’s Cos. (NYSE: LOW), the Mooresville, N.C.-based home improvement retailer, also remains optimistic about the outlook for the housing industry.
“Those key drivers you think about, disposable income, employment, home prices continuing to appreciate, and then the housing turnover that I spoke to, all of those help support a healthy home improvement industry that we see out there,” Chief Executive Officer Robert Niblock said during a March 13 conference call. “There’s a few challenges. Credit remains tight.”