Construction of single-family and multi-family homes in February fell 22.5 percent from January – the largest monthly drop since 1984.
Builders broke ground on fewer homes in February than a month earlier, and the trend is not likely to improve anytime soon, according to federal data released Wednesday.
Construction of single-family and multi-family homes fell to a seasonally adjusted annual rate of 479,000 in February, the lowest level since April 2009, the Commerce Department reported. That’s down 22.5 percent from January, the largest monthly plunge since 1984.
Meanwhile, fewer builders pulled permits in February, suggesting that construction is unlikely to pick up soon. Building permits were at a seasonally adjusted annual rate of 517,000, the lowest level since the government began tracking the numbers in 1960.
The results suggest that builders lack the incentive to break ground given the stiff competition they face from the excess supply of existing homes — particularly the deeply discounted foreclosures that are flooding the national housing market.
“Until the market works through the overhang, there’s no need to ramp up production,” said Michael Larson, an analyst at Weiss Research. “The February numbers underscore the fact that new-home builders are at a steep competitive disadvantage.”
The weakness was widespread geographically and among housing types.
The drop in construction was most severe among multi-family homes, which tumbled 46.1 percent from January to February. Housing starts for single-family homes fell 11.8 percent. Starts were down in every region, led by a 48.6 percent drop in the Midwest.
As for permits, which fell 8.2 percent in February, the decline was led by a 9.3 percent drop in single-family homes. Permits for multi-family homes were down 4.9 percent.
The numbers may be skewed by bad weather in some parts of the country.
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