U.S. Housing Starts Surge in February Thanks to Multifamily Construction Surprise |
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Looks like the US housing market is finally coming out of hibernation. In February, new home construction saw its first increase in six months, with multifamily projects taking the lead. This uptick could be a promising sign that the housing market is starting to stabilize. |
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Starting to stabilize: US housing starts rose 9.8% last month to reach a 5-month high, surpassing Bloomberg's economist forecast. Starts were at an annualized rate of 1.45M. Applications to build, a future construction indicator, increased by 13.8% to 1.52M units, supported by permit gains for both single-family and multifamily projects. |
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Budding optimism: The rise in multifamily homebuilding could signal the end of the housing market slump. Homebuilder sentiment, supply chains, and home purchase applications have improved. But, high mortgage rates and material costs still pose challenges. Financial turbulence may lower borrowing costs but also tighten lending standards. In February, single-family homebuilding rose 1.1%, multifamily construction by 24%, and single-family permits increased. |
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➥ THE TAKEAWAY |
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Completions surge: The number of finished homes increased by 12% to 1.56 million, marking the swiftest growth rate since 2007, primarily due to the rise in multifamily projects. This surge could positively impact Q1 GDP, which was previously expected to decline due to lower home construction outlays. |
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The outlook for the housing market may improve further as data on new and existing home sales in February is set to be disclosed this week. Even with the Federal Reserve's aggressive interest rate hikes, it is possible that the housing market's most challenging times are now behind us. |
