Housing starts unexpectedly fell sharply in February. Starts fell a monthly 17.0 percent, following no change in January. Expectations were for a 1.048 million pace for January. The 0.897 million unit pace was down 3.3 percent on a year-ago basis. This was the lowest starts level since January 2014 with a 0.897 million unit annualized pace.
Single-family units dipped 14.9 percent in February, following a 3.9 percent decrease the month before. Multifamily units dropped 20.8 percent after rising 7.9 percent in January.
By region, the Northeast Census region fell a whopping 56.6 percent (likely weather related). Declines were also seen in other regions: the Midwest down 37.0 percent; the West down 18.2 percent; and the South down 2.5 percent.
Housing permits, however, were more positive, gaining 3.0 percent after no change in January. The 1.092 million unit pace was up 7.7 percent on a year-ago basis. Analysts called for a 1.058 million unit pace.
The housing sector is hard to read due to severe winter weather. The outlook is not as bad as current activity. But this sector is still sluggish looking forward and this is another indicator that likely will keep the Fed dovish at this week’s FOMC meeting. Also, expect analysts to nudge down first quarter GDP forecasts.