By JOSH BOAK AP Economics Writer
WASHINGTON (AP) — The number of homes under construction in the U.S. decreased by 8.7 percent in February, as ground breakings for single-family houses plunged to their lowest level in nearly two years.
The Commerce Department said that builders started construction at a seasonally adjusted annual rate of 1.16 million units last month, down from a 1.27 million pace in January. The setback stems from a 17 percent drop in the building of single-family houses, marking the weakest pace since May 2017. Apartment construction increased in February.
The number of single-family housing starts are running 2.3 percent below last year’s pace. Lower mortgage rates at the start of 2019 appear to be boosting buyer demand for housing, but builders are contending with rising costs for labor and land that limit how much new construction can take place. Cold weather in February also probably contributed to the decline in housing starts, and recent flooding in the Midwest might dampened building in that region.
“Today’s lackluster release is likely due to poor weather conditions,” said Matthew Speakman, an economist analyst at the real estate company Zillow. “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.”
The number of starts decreased by 29.5 percent in the Northeast. They declined by 6.8 percent in the South and 18.9 percent in the West. Home construction increased by 26.8 percent in the Midwest, but the gains came entirely from apartment complexes.
The number of housing permits issued, an indicator of future activity, fell 1.6 percent to an annual rate of 1.30 million.