The US government recently reported that new home construction rose a surprising 22.2 percent in February, showing the largest percentage gains since January, 1990. The rise to a seasonally adjusted pace of 583,000 new homes is the first since April of last year. Analysts had expected starts to decline a small amount for the month in the face of dwindling demand and huge competition from foreclosed homes and unsold properties.
According to the report, issued by the US Commerce Department, one of the main reasons for the jump was a leap for starts in multifamily units, such as apartments and condominiums. The gain in multifamily units was a whopping 82.3 percent from January to a 226,000-unit yearly pace, while the gain in single family homes was just 1.1 percent to a pace of 357,000.
“While welcome news, this gain only reflects a modest rebound from January, which was the worst month in history for new-home production,” said National Association of Home Builders (NAHB) Chief Economist David Crowe.
“Builders did pull a larger volume of single-family permits in February, suggesting a glimmer of hope for the prime home buying season, which is near at hand,” added NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. “That said, we realize there’s a need to be extremely cautious in terms of new building activity going forward, because there’s still quite a lot of inventory out there that needs to be absorbed as foreclosures continue to flood the market in many areas.”
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