Housing starts tank in February
* Housing starts plunged 22.5% to a seasonally adjusted annual rate of 479,000 from 618,000 in January. That was far below the consensus forecast of 566,000. Moreover, building permit issuance dropped 8.2% to a 517,000 SAAR from 563,000 in January. That also missed forecasts by a large margin. The decline in starts was the biggest in any month going back to 1984, and it leaves construction activity at the lowest level since April 2009.
* By property type, single family starts fell 11.8% while multifamily construction plunged 46.1%. Single family permit issuance dropped 9.3% while multifamily permitting slumped 4.9%.
* Regionally, starts fell across the board -- by 6.3% in the South, 28% in the West, 37.5% in the Northeast and 48.6% in the Midwest. The story was the same with permits -- they fell 1.4% in the South, 5.4% in the Midwest, 13.6% in the West and 27.8% in the Northeast.
The housing market could use some good news. But it sure didn't get it in February! Construction activity plunged and permits sank, with declines in every part of the country and in both the single family and multifamily markets. There literally is no sliver of good news to be found in this latest report.
What's going on? Why won't builders actually build homes? Because of the massive overhang of distressed, used homes! There are simply too many lenders and individual owners willing to dump old houses and condos on the market at deeply discounted prices. Builders can't compete, so they're not ramping up production. Until we clear that backlog, construction activity will stay depressed and construction employment will remain down in the dumps.