WASHINGTON – Construction on new U.S. homes nudged up in February with modest gains for single-family residences and apartments, as longer-term trends signaled a housing market that continued to strengthen, according to data released Tuesday.
The U.S. Department of Commerce's report also showed substantial gains in building permits, which indicate future demand.
Construction on new U.S. homes rose 0.8 percent in February to a seasonally adjusted annual rate of 917,000. Economists polled by MarketWatch had expected construction starts in February to rise to a rate of 913,000 from an original January estimate of 890,000. On Tuesday the government revised January's rate upward, to 910,000.
Starts for single-family homes rose 0.5 percent in February to a rate of 618,000, the highest level since June 2008.
The longer-term picture points to a rebound in activity — starts in February were up 28 percent from the same period in the prior year. Despite construction gains, which have been fueled by pent-up demand and affordability, starts remain below a bubble peak of almost 2.3 million in 2006.
"The overall picture on the housing starts front has been somewhat tepid over the past two months. Nevertheless, the housing recovery continues to run at a solid pace, with both broader trends pointing to a steady recovery in the sector," wrote Gennadiy Goldberg, a strategist at TD Securities, in a research note.
Going forward, there's concern that overly stringent lending standards and ongoing high unemployment could cut progress. But a recent report on confidence among homebuilders signaled that their outlook on upcoming sales increased in March, while their views about present home sales worsened.
Stephen Stanley, an economist at Pierpont Securities, wrote in a research note that building may be somewhat constrained in coming months.
