New U.S. home construction rose in February and building permits climbed to the highest level in almost five years, adding to signs of progress in the housing market that’s helping boost the economy.
Builders broke ground on 917,000 homes at an annual rate, up 0.8% from a revised 910,000 pace in January that was higher than initially estimated, the Commerce Department reported today in Washington. Building permits, a proxy for future construction, advanced 4.6% to 946,000, the strongest since June 2008.
Confidence is being restored to the housing market as property values stabilize, the employment outlook brightens and mortgage rates hover around record lows. An easing of bank lending conditions would help bring home ownership within reach of more Americans and stoke bigger gains in home construction.
“Housing continues to be a bright spot for the economy, and this is a good report,” said Anika Khan, senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina, a subsidiary of the largest U.S. mortgage lender. “Permits definitely showed a big jump. As long as that is outpacing starts, we’ll likely see another positive month next month.”
Stock-index futures held gains after the figures, with the contract on the Standard & Poor’s 500 Index expiring in June climbing 0.2% to 1,549.8 at 8:46 a.m. in New York.
The median estimate of 81 economists surveyed by Bloomberg called for 915,000 starts. Forecasts ranged from 872,000 to 1 million. The prior month’s figure was revised from a previously reported 890,000 pace.
Applications for building permits increased last month from a 904,000 annual rate in January and compared with a 925,000 median forecast. A higher level of permits compared with starts may be a sign that home construction will pick up.
Single-family building permits rose 2.7% in February to a 600,000 annual rate.
Construction of one-family properties climbed 0.5% to a 618,000 rate, the highest since June 2008, from 615,000 the prior month.
Work on multifamily residences such as apartment buildings rose 1.4% to an annual rate of 299,000.
Two of four regions showed gains in February starts, led by a 37.5% jump in the Midwest. New construction rose 18.4% in the Northeast. Starts decreased 7.2% in the West and 5.7% in the South. The drop in the South reflected fewer starts of multifamily units.