If housing starts are any indication, the housing market may be stabilizing.
U.S. housing starts rose 9.8%, reaching a rate of 1.450 million units in February. Economists had expected a rate of 1.310 million units.
This marks the highest level since September, due to an increase in both single- and multi-family homebuilding. However, starts were still down 18.4% year over year in February.
Single-family building permits reversed an 11-month decline, increasing 7.6% from the month before and reaching a rate of 777,000 units.
The Commerce Department said February single-family housing starts, which account for the bulk of homebuilding, increased by 1.1% to an annual rate of 830,000 units. This was still a 31.6% decrease compared to the same period last year.
The Northeast and West saw increases in single-family homebuilding, but the South and Midwest saw declines.
“The uptick in single-family housing permits and starts aligns with the recent increase in homebuilder sentiment,” said First American Deputy Chief Economist Odeta Kushi. “While three months of improving home builder sentiment may indicate a turning point for single-family homebuilding, builders continue to face headwinds in the form of higher construction costs and an affordability-constrained housing market.”
Starts for housing projects with five or more units increased by 24.1%, reaching 608,000 units. This marks the highest level since last April. The demand for rental accommodation continues to support multi-family housing construction.