Groundbreaking on new homes fell for a third straight month in February, with the extreme cold winter in the Northeast resulting in the region's biggest drop in more than two years, the Commerce Department said on Tuesday.
However, a rebound in building permits offered some hope for the housing market as it struggles to emerge from a soft patch.
The Commerce Department said new housing starts slipped 0.2 percent to a seasonally adjusted annual rate of 907,000 units. That followed January's revised 11.2 percent decline and suggested underlying weakness in housing activity apart from the drag of cold weather. January starts were previously reported to have tumbled 16 percent.
Economists polled by Reuters had expected starts to rise to a 910,000-unit rate last month.
Groundbreaking plunged 37.5 percent in the Northeast last month, indicating unusually cold temperatures continued to dampen housing activity. That was the biggest drop in more than two years and pushed starts in the Northeast to their lowest level since November 2012.
Starts fell 5.5 percent in the West, which was unaffected by severe weather. nut there was a 7.3 percent rise in starts in the South and a 34.5 percent jump in the Midwest.
However, permits to build homes increased 7.7 percent in February to a 1.02 million-unit pace. Permits for single-family homes fell 1.8 percent, while multifamily sector permits surged 24.3 percent.
Housing started losing momentum last summer, with sales falling after a run-up in mortgage rates.
While mortgage rates have dropped a bit and the weather is starting to warm up, housing will probably take a while to regain strength as high prices and a shortage of homes on the market keep out potential buyers.
A report on Monday showed builders were optimistic in March but downbeat about sales over the next six months. Builders were also worried about shortages of lots and skilled labor, and rising prices for materials.
First published March 18 2014, 6:27 AM