Last Update: 17-Mar-15 09:13 ET
- Housing starts declined 17.0% in February to 897,000 from an upwardly revised 1.081 mln (from 1.065 mln) in January. The Briefing.com Consensus expected housing starts to decline to 1.041 mln.
- Many analysts have blamed inclement weather conditions for the poor retail sales and industrial production reports that were released over the last few days. Our analysis of the data suggested there were more underlying problems than just the weather.
- Much of the poor housing data, though, can rightfully be blamed on bad weather.
- Record snowfall in the Northeast and extreme cold in the Midwest likely played a large part in curtailing new construction. Housing starts in these regions declined 45.0% in February, from 262,000 in January to 144,000. Those regions accounted for 64% of the entire February decline in housing starts.
- Still, the weather can’t be completely at fault. Poor underlying economic conditions likely caused some of the February pullback. For example, in the West region, warmer-than-normal temperatures should have helped offset some of the decline from the Eastern half of the U.S. That did not happen. Starts fell 18.2% to 239,000 in February from 292,000.
- The construction details were a little disappointing. Single-family starts, which normally move on a stable trend, fell 14.9% to 593,000 in February from 697,000 in January. The volatile multifamily sector declined 20.8% to 304,000 from 384,000.
- Normally, the trends in single-family and multifamily construction could give some indication of how construction growth will move over the next few months. However, given that the weather likely produced some of the weakness, the big drop in single-family construction is not something to be overly concerned about.
- Despite the decline in starts, the number of units under construction increased slightly to 836,000 in February from 833,000 in January.
- The pullback in construction in February was likely due to an exogenous weather factor. The size of the expected rebound in March would explain the full impact of the weather conditions.