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The gain was due entirely to the single-family sector, where starts rose 7.4% to a rate of 1.46 million units — their fastest pace in more than 20 years — since December 1978.
"These exceptionally strong numbers, combined with upwardly revised figures for January and December, are ample evidence that housing — specifically residential fixed investment — is helping pull the economy out of recession," said Gary Garczynski, president of the National Association of Home Builders (NAHB). The Commerce Department revised its already strong report on January housing starts from an originally reported overall rate of 1.68 million units to 1.72 million units. It also revised upward its report on December starts, from 1.58 million units to 1.6 million units.
Multifamily starts, which are typically more volatile, fell 14.3% to an annual rate of 312,000 units, partially offsetting a substantial gain in January.
Building permits, an indicator of future building activity, rose nearly 2% in February to a seasonally adjusted annual rate of 1.75 million units. Single-family permits rose 2.7% to a rate of 1.37 million units, while multifamily permits declined 1.3% to a rate of 381,000 units. Both were up from their fourth quarter 2001 averages.
Attributing housing's exceptionally strong showing at the beginning of this year partly to unusually favorable weather conditions, Garczynski also credited the ongoing economic recovery, continuing low mortgage rates, reviving consumer confidence, and strong house price appreciation.
While some slowing of housing production may occur in the second quarter as things settle down to a more sustainable, but strong, level, Garczynski said, NAHB is forecasting that total housing starts in 2002 will about equal 2001's healthy pace of 1.6 million units.
Publication date: 03/18/2002