Multiunit Housing Starts Down Sharply

By:
Peter King | March 16, 2010

New housing starts fell 5.9 percent in February, as builders cut way back on initiating construction of apartment buildings and condominium developments.

Many analysts attributed the decline in February’s figures, released today by the Commerce Department, to harsh winter weather in many parts of the country and continuing soft demand due to widespread foreclosures.
 
Private construction starts on single-family homes was down only slightly, to a seasonally adjusted annual rate of 499,000, a 0.6 percent decline from January’s rate of 502,000. But new construction on residential buildings of five units or more dropped by 43.1 percent, to an annual rate of 58,000 units, down from 102,000 units in January.
 
The total annual rate of 575,000 units for all private housing starts was slightly better than economists had expected, although down from January’s rate of 611,000 units. The February rate is 0.2 percent above the February 2009 rate of 574,000.
 
The housing construction market has been burdened by a glut of unsold condominiums. While the market for single-family has shown signs of recovery, the condominium market has struggled, due in part to lender’s reluctance to underwrite mortgages for condominiums in developments with high vacancy or foreclosure rates.
 
February’s rate of 499,000 construction starts on single-family homes represents an annual increase of 39.8 percent from the February 2009 rate of 357,000 units. By contrast, February’s rate of private construction starts on buildings of five or more units was down 71.6 percent from the February 2009 rate of 208,000 units.
 

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