By Manuel Gutierrez, Consulting Economist to NKBA
The housing market remains robust, with construction of new homes rising to an annual pace of 1.77 million units in February, up 6.9 percent from January — the highest rate of production in more than 15 years.
- Single-family starts rose 5.7 percent in February, to 1.22 million units (annualized), while Multifamily jumped nearly 10 percent to a pace of 554,000 units.
- Among multifamily starts, buildings with up to four housing units accounted for the lion’s share of growth, rising to 53,000 units from 10,000 in January. Buildings with five or more dwellings barely increased — by just 4,000 units — to 501,000 units in January.
- Housing permits fell 1.9 percent in February to 1.86 million (annualized), driven mostly by a 4.4 percent drop in multifamily housing permits (to 652,000 units). Single-family permits dipped 0.5 percent to 1.2 million starts.
- Regionally, starts rose in the Northeast (up 29 percent to 130,000 starts), the Midwest (up 15 percent to 226,000), and the South (up 11 percent to 1 million starts) while they fell in the West (down 11 percent to a rate of 396,000 units).
- The housing market might start to soften in the near future. Inflation aside, mortgage rates have risen more than a percentage point since January to their current 4.16 percent rate on 30-year fixed loans — and that’s before the Federal Reserve’s 0.25 percent hike in the federal funds rate, which will translate to higher rates on adjustable mortgages.
The housing market continues its torrid pace, jumping 6.9 percent in February to a yearly pace of 1.77 million units — the highest production level since June 2006.
