A new report was just released that shows housing starts dove in February, making it the worst plunge since 2011. The housing industry is still trying to bounce back from the recession, so the latest numbers are another disappointment for an industry that is struggling to thrive again.
In February, only 897,000 houses were being developed, which is a 17 percent decrease from January, and the lowest start on housing in the past year. Although some of the drop is being blamed on the horrible weather in February, which left almost the entire United States in a bitter cold and under several feet of snow. The horrible weather however should not be the only blame for the plunge in housing development, because the construction industry is still struggling as well.
In more depressing news for the housing market, single-family building permits also fell to levels that haven’t been seen in nearly a year, which also disproves the theory that the weather is to blame for the bad February numbers in the new housing department. There has not been any movement in the construction industry since the beginning of 2014, however there has been quite a bit of an increase in the number of people choosing to rent homes. Experts claim that the rise in wages and the improving job market will lead the housing industry to the road to recovery, including the rise in demand for apartments and other rental properties.
A Look at Statistics
When it comes down to statistics, the total number of building permits did climb up 3 percent, which is the fastest rate since October. This is partially due to a rise in demand for the multifamily structural units, but single-family permits were the lowest that they have been since May 2014. The start of single-family dwellings also saw a large decrease, with a 14.9 percent decline, making only 593,000 houses in February. The construction of condominiums and apartments also saw a decline of 20.8 percent, which means only 304,000 units were started.
As far as construction goes, in the Northeast construction fell a whopping 56.5 percent and fell 37 percent in the Midwest. The West and South also saw sharp declines in new housing starts, which makes it a little harder to claim that these huge drops were all due to the bitterly cold February weather.
What About Interest Rates and the Future?
When it comes to interest rates, the 30-year fixed-rate mortgage was averaging 3.86 percent, which is below the 4.26 percentage rate. There are also more opportunities in terms of employment and along with better weather, it looks like there might be a rebound in March, as long as the interest rates stay low. The lower interest rates are partly what is helping Americans purchases houses, especially considering people are still struggling to get back on their own feet after the recession. The unemployment rate fell to 5.5 percent, which is the lowest level in seven years. Add all of this information together, you get a hopeful look ahead at March, although right now it’s cautious optimism.