It
looked last month as though residential construction was about to take off.
While starts were down in January, permits surged by 10.4 percent. Builders
apparently had second thoughts in February as both measures fell by double
digits.

The
U.S. Census Bureau and Department of Housing and Urban Development said permits
for construction of residential units were at a seasonally adjusted rate of 1,682,000.
This is 10.8 percent below the revised (from 1,881,000) rate in January of
1,886000. The February rate was still a 17.0 percent improvement on the
permitting rate a year earlier.

Permits
were expected to decline after January’s substantial increase, but analysts polled
by Econoday were still looking for a much higher number. Estimates ranged from 1,600,000
to 1,862,000 with a consensus of 1,750,000.

Single-family
permitting was down 10.0 percent
from the January level of 1,270,000 to
1,143,000 although that was still 15.0 percent higher than a year earlier. Multifamily
construction fell 11.6 percent to a rate of 495,000 but remained up 24.1
percent year-over-year.

On
an unadjusted basis there were 117,200 residential permits issued during the
month compared to 128,800 in January. Single-family permits numbered 80.9 and
83.9 for the two periods.

For
the year-to-date (YTD) 246,000 permits have been issued, up 16.0 percent from
the same period in 2020. There have been 164,800 single family permits and
74,500 for construction in buildings of five or more units. These are YTD
increases of 16.5 percent and 15.7 percent, respectively.

Housing
starts fell 10.3 percent
from January’s estimate of 1,584,000 (revised from 1,580,000)
annualized units to 1,421,000 units, the lowest rate since last June. This put starts
9.3 percent behind the 1,567,000 unit rate in February 2020.

Analysts
had expected starts to be in the range of 1,470,000 to 1,670,000 units. The
consensus was 1,570,000 units.

Robert
Dietz, chief economist for the National Association of Home Builders issues the
following comment about the census construction data. “Builders report concerns over
increasing lumber and other construction costs, as well as delays in obtaining
building materials. Rising interest rates will also erode housing affordability
in 2021, as seen by recent gains in the 10-year Treasury rate. Builders also
reporting growing concerns about a more challenging regulatory environment that
could limit land development volume. The NAHB forecast includes some weakening
for single-family home building at the start of 2021 (off recent highs), with a
return to the long-run post-Great Recession trend as the year progresses.

Single-family
starts were at a rate of 1,040,000 compared to 1,136,000 the previous month, an
8.5 percent loss. Those starts are now up only a fraction of a point from a year
earlier. Multifamily starts declined compared to both earlier periods, by 14.5
percent and 27.6 percent, respectively.

There
were 100,700 starts during the month, 72,200 of them single family homes. In
January, the respective numbers were 111,000 and 77,100 units.

YTD
there have been 211,700 housing starts, down from 224,700 in the first two
months of 2020 and a decline of 5.8 percent. Single-family starts are higher than
a year earlier by 6.4 percent to 149,300 units while multifamily starts are down
26.1 percent to 60,800 units.

Completions
increased by 2.9 percent from January
to a seasonally adjusted rate of 1,362,000
units and are running 5.0 percent above a year earlier. Single-family
completions were up 2.8 percent and 3.2 percent to an annual rate of 1,042,000
and multifamily completions, at 314,000 have grown by 3.0 percent and 12.9 percent.

There
were 95,600 residential units completed during the month compared to 93,000 in
January. Single-family completions increased from 71,800 to 74,100.

YTD
completions number 188,600, up 4.2 percent from 181,000 during the same period
in 2020. The 145,900 single-family completions are 9.4 percent more than the
same period last year but multifamily completions at 41,900 are down 9.6
percent.

At
the end of the reporting period there were 1,283,000 units of housing under
construction, 621,000 of them single-family residences. There were also 214,000
permits issued under which construction had not started.

Permits
in the Northeast were down 9.8 percent for the month but were 32.8 percent
higher on an annual basis. Starts are down 39.5 percent and 2.5 percent for the
month and the year. Completions were 1.9 percent and 2.9 percent lower than in
January and in February 2020.

The
Midwest saw permitting rise 1.2 percent from January and 26.4 percent from the
previous February. Starts, on the other hand, plummeted by 34.9 percent and
29.9 percent. There were 10.9 percent more completions in February than in
January, 0.5 percent more than a year earlier.

Permitting
declined by 13.9 percent in the South compared to January but were up by a
nearly identical percentage year-over-year. Starts fell 9.7 percent and 16.6
percent. Completions edged up 0.8 percent from the previous month but were 16.2
percent higher on an annual basis.

The
West’s rate of permitting was 11.3 percent lower than the prior month but up 12.7
percent from the prior February. Starts rose 17.6 percent and 15.8 percent. Completions
grew by 5.1 percent from January but were 10.9 percent lower year-over-year.

By Jann Swanson , dated 2021-03-17 10:20:34

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Courtesy of Mortgage News Daily

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