US housing starts beat forecats in February

Housing starts in the US jumped past forecasts in February, even as the pace of new permit to begin construction slowed, although the underlying details were more upbeat according to some economists.

Housing starts rose 3.0% month-on-month to reach an annualised rate of 1.288m, according to the Census Bureau, and were 6.2% ahead of their year-earlier figure.

The former was better than the 1.26m which economists had penciled in.

A preliminary estimate of 1.246m starts for January was revised up to show 1.251m.

Starts on single-family homes increased 6.5% on the month in February to 872,000.

Unexpected drop in housing permits due to multi-family segment

Permits to break ground on new homes ran at 1.213m (consensus: 1.26m), 6.2% below the prior month's upwardly revised figure and down from the October 2016 peak of 1.26m.

However, weakness was concentrated among those permits for dwellings with 5 or more units, which dropped by 26.9% on the month to 334,000. Permits for single-family residences rose 3.1% on the month to 832,000 and those for homes with two to four units by 34.8% to 47,000.

February's pace of permit issuance was 4.4% above the year-ago figure.

In January, authorities issued 1.293m permits, up from the originally estimated pace of 1.285m.

"Stepping back from the short-term noise, the key point here is the the trends in single-family starts and permits rose sharply last fall, before the election, and the gains have been held. The leap in homebuilder sentiment since the election suggests further gains are a realistic prospect, but that does not mean activity will rise every month; a temporary correction in March seems a decent bet," said Ian Shepherdson, chief US economist at Pantheon Macroeconomics.