US February housing starts down 9% in latest report
February US housing starts are the worst in a year and a half.
US housing starts are down in a possibly troubling sign for the US economy. New single-home family construction fell 9%, according to data released from the US Commerce Department. The statistic was the worst downturn in US housing since 2017.
US new housing starts: key figures
|Single family homebuilding||-17%|
|Seaasonally adjusted annual rate of new houses||1.116 million units|
Why are US housing starts down?
This disappointing news is similar to the lackluster new home sales in January. Single-family homebuilding is down by 1.7% to a seasonally adjusted annual rate of 1.16 million units. Building permits also fell by 1.6%. The US housing starts are possibly down because of practical concerns in construction. Robert Frick, corporate economist for Navy Federal Credit Union, said that three factors affected the lack of new home construction.
‘Builders are still hampered by the three L’s: land, labor and lumber, which means finding zoned land at reasonable prices remains hard, and then building on that land is expensive because of a lack of tradesmen and more costly materials,’ said Frick.
Matthew Speakman, economic analyst with real estate company Zillow, blamed a harsh US winter for worse-than-expected housing starts.
‘Today's lackluster release is likely due to poor weather conditions.The outlook for home construction should improve was we turn the corner into spring, but that could take longer in parts of the country where flooding continues into late March,’ said Speakman.
What’s next for the US housing market?
There is some pessimism about the US housing market after the latest worse-than-expected housing statistics. Joel Franco, chief economist at Naroff Economic Advisors, said that the highs of the strong US economy are starting to fall.
‘The sugar high is just about over. The risks are more toward the downside than the upside,’ said Franco.
While there is concern about the housing market, there is still optimism. Low mortgage rates and warmer weather may help improve new home construction in the future.
TIAA Bank vice president, John Pataky, said that the economy is still strong overall and potential homebuyers can still take advantage of low mortgage rates.
‘The economic fundamentals remain robust. If buyers decide to take decisive action in this period of flat rates and decelerating cost growth, we could see the market pick up as spring homebuying season gets under way,’ said Pataky.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
Please see important Research Disclaimer.
European Central Bank meeting
Learn about how the ECB meeting affects interest rates and price stability ahead of the next announcement on 24 October 2019.
- How might the next meeting affect the markets?
- What are the key rate decisions to watch?
- Why is the Governing Council announcement important for traders?
Live prices on most popular markets
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.