Housing construction plummets in February

Home building plummeted in February as cold winter weather and snowstorms pummeled the Northeast and Midwest.

Construction of new homes dropped 17 percent last month falling to a seasonally adjusted annual rate of 897,000 homes down from the 1.08 million in January, the Commerce Department reported on Tuesday.

{mosads}Housing starts plunged 56.5 percent in the hard-hit Northeast, which received record snow this winter, and fell 37 percent in the Midwest.

Meanwhile, construction dropped 18.2 percent in the West and 2.5 percent in the South.

“There’s no question that the harsh winter we had in the Midwest and Northeast was the culprit in February’s slowdown in new home construction,” said Bill Banfield, vice president for Quicken Loans.

“I wouldn’t look too much into February’s drop, as the overall housing picture shows homebuilder confidence growing and permits for new construction rising,” Banfield said.

“Look for demand to increase in the coming months.”

A separate report on Monday showed that builder confidence slipped two points in March but expectations are for the market to bounce back heading into the spring buying season, the National Association of Home Builders/Wells Fargo index showed.

Building permits, an indication of future construction, ticked up 3 percent to an annual rate of 1.09 million in February. But permits for apartment buildings helped lift the figure amid a drop in single-family permits.

The economy is adding jobs at a steady pace — 295,000 jobs in February — and mortgage rates remain historically low, which could boost demand this year in the housing sector. 

Still, wage increases have yet to fire up and there are still some hurdles for interested home buyers such as credit availability.