Washington, DC, Mar. 18--The number of new housing projects builders broke ground on in February dropped 11%, the sharpest decline in nearly a decade, as bad weather and an uncertain economic climate took its toll on the residential construction market.
Housing construction dropped to a seasonally adjusted annual rate of 1.62 million units in February, representing an 11% decline from the month before, according to the Commerce Department.
The level of housing activity in February was weaker than the 1.75 million pace economists were forecasting.
The housing and residential construction markets have been one of the few bright spots of the ailing economy. But February’s figures raised new questions about the extent to which the residential construction market will continue to support the sagging national economy.
Last week, rates on 30 year mortgages fell to a record low of 5.61%, the fourth week in a row that weekly rates dropped to new lows, according to mortgage firm Freddie Mac.
Record low mortgage rates are feeding a home mortgage refinancing boom. As consumers swap higher interest rate home loans for lower interest rate ones, the extra cash has helped to support consumer spending, a main force keeping the economy going.
But consumers have turned more cautious amid the uncertain economic environment and a worsening jobs market.
The 11% drop in housing construction in February marked the biggest decline since a 17% plunge in January 1994.
The number of single family homes started in February from the month before plunged 13.7% to a seasonally adjusted annual rate of 1.30 million. The decline was the biggest since January 1991.
Construction of apartments, condominiums and other multifamily housing, however, rose to a pace of 297,000 in February, a 5.7% increase from January's level.
By region, total housing construction was flat in the Northeast at a seasonally adjusted annual rate of 142,000 units. In the Midwest, construction fell 19% to a rate of 282,000. In the South, housing construction went down 9.4% to a rate of 742,000, and in the West the number of housing projects fell 11.1% to a pace of 456,000 units.
In January, housing construction dipped by 0.1% from December's level.
