Steel Markets

Housing Starts Fall After a Rousing January

March 25, 2019

Housing starts took a tumble in February, dropping 8.7 percent below January’s level for a seasonally adjusted annual rate of 1,162,000. Single-family starts plummeted 17.0 percent, although apartment-style housing of five units or more jumped 23.5 percent. Starts declined in all regions except the Midwest, which saw a gain of 26.8 percent for the month.

“The overall lower starts numbers are somewhat deceiving given the revised single-family starts figure in January was at a post-recession high,” said Danushka Nanayakkara-Skillington, AVP for Forecasting and Analysis at the National Association of Home Builders. “Absent the surge last month, the drop in single-family production in February is not as huge as it appears. Still, builders continue to remain cautious due to affordability concerns, as illustrated by the flat permits data.”

Permit authorizations were also down, but at a much smaller rate. Permits dipped 1.6 percent from January and 2.0 percent from a year ago. Total permit authorizations were at a SAAR of 1,296,000. Single-family authorizations stayed at the same rate as January at 821,000.

Greg Ugalde, chairman of NAHB, said February starts are “somewhat in line with flat builder expectations and serve as a cautionary note that affordability factors continue to affect the marketplace.”

Negative affordability factors include excessive regulations, a scarcity of buildable lots, persistent labor shortages and tariffs on lumber and other key building materials, he added.