Work begins on 583,000 homes, a 22% rise from Jan
(WASHINGTON) Housing starts in the US unexpectedly snapped the longest streak of declines in 18 years in February, adding to signs that the pace of the economy's decline may be easing.
Work began on 583,000 homes at an annual rate, a 22 per cent rise from January, the Commerce Department said in Washington yesterday. The jump was influenced by warmer weather and an 82 per cent surge in starts on condominiums, apartments and townhouses that's unlikely to be sustained, analysts said.
While the glut of unsold properties on the market means the housing industry's recession will probably continue for some time, economists said yesterday's report indicates the worst of the contraction may have passed. Retail sales figures for February last week also indicated a slower rate of decline.
'You get the sense from a lot of the data coming out now that we're beginning to get to a bottom,' Nariman Behravesh, chief economist at IHS Global Insight in Lexington, Massachusetts, said in an interview with Bloomberg Television. 'We're not quite there yet.'
A separate report showed producer prices rose 0.1 per cent in February, less than the 0.8 per cent gain in the previous month. On a year-on-year basis, wholesale prices fell 1.3 per cent, with a 4 per cent increase after stripping out food and energy costs.
Building permits, a sign of future construction, rose less than starts, indicating construction may again slow. Developers are still contending with record foreclosures that depress prices and profits, and put pressure on the Federal Reserve, which was meeting yesterday and also today, and the Obama administration to solve the credit crisis.
Starts were projected to fall to a 450,000 annual pace, according to the median forecast of 71 economists surveyed by Bloomberg News. Estimates ranged from 400,000 to 500,000. January's starts were revised up to 477,000 from a previously estimated 466,000.
Permits, a sign of future construction, increased 3 per cent to a 547,000 annual pace. They were forecast to drop to a 500,000 annual rate, according to the survey median.
Construction of single-family homes climbed 1.1 per cent to a 357,000 rate, yesterday's report showed.
Work on multifamily homes, such as townhouses and apartment buildings, surged to a 226,000 pace from 124,000 in January. -- Bloomberg
Source: Business Times, 18 Mar 2009