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US housing starts rebound as single-family projects soar
[WASHINGTON] US housing starts rebounded more than expected in February, hitting their highest level in five months, as builders ramped up the construction of single-family homes in a sign of confidence in the economy.
Groundbreaking increased 5.2 per cent to a seasonally adjusted annual pace of 1.18 million units, the highest level since September, the Commerce Department said on Wednesday. January's starts were revised up to a 1.12 million-unit rate from the previously reported 1.099 million-unit pace.
Economists polled by Reuters had forecast housing starts rising to a 1.15 million-unit pace last month.
The rebound in groundbreaking activity could lift first-quarter gross domestic product growth estimates, which were cut on Tuesday following February's weak retail sales report. The housing sector is being supported by a firming labor market, which is encouraging young adults to leave their parents' homes.
The increase in household formation has largely benefited the multi-family segment of the housing market as many young adults have student debts and little savings to purchase a home.
Labor and land shortages, however, remain a challenge for builders, a survey showed on Tuesday.
Last month, groundbreaking on single-family housing projects, the largest segment of the market, surged 7.2 per cent to an 822,000-unit pace, the highest since November 2007.
Single-family starts in the West rose to their highest level since September 2007. In the South, where most home building takes place, single-family starts were unchanged.
Single-family starts soared 18.6 per cent in the Midwest. Groundbreaking on single-family housing projects tumbled 12.5 per cent in the Northeast, likely as ground remained too wet after a major snowstorm in January.
Housing starts for the volatile multi-family segment rose 0.8 per cent to a 356,000-unit pace.
Building permits fell 3.1 per cent to a 1.17 million-unit rate last month. Permits for the construction of single-family homes rose 0.4 per cent last month, while multi-family building permits dropped 8.4 per cent.