US housing starts fall in February as harsh winter weather stymies construction

Housing starts fell more than expected in the US during February as extreme winter weather conditions hindered activity but still-elevated construction permits and backlogs seem to point to momentum in homebuilding remaining high over the next few months.

Residential starts dropped 10.3% to an annualised rate of 1.42m last month, the lowest reading since August, according to the Census Bureau, short of Wall Street expectations for a reading of 1.56m.

Applications to build also fell, down 10.8% to an annualised print of 1.68m, exceeding the pace of starts for a seventh consecutive month, while backlogs continued to build as the number of homes cleared for construction but not yet started rose 3.9% to 214,000 and hit its highest level since 2006 amid the harsh winter weather.

Although the severe weather weighed on residential construction ability in February, the heightened number of building permits pointed to more gains being on the horizon in the home construction sector in the months to come.

Construction slumped in three of four regions, including an almost 35% decline in the Midwest and a 9.7% drop in the South, while starts in the Northeast fell roughly 40%. On the other hand, starts in the West increased by 17.6% last month.