New Home Construction Grows in February

Homebuilding showed signs of improvement in February, as housing starts and building permits neared five-year highs. Building permits, a sign of future construction, were 33.8 percent above February 2012 levels, and new housing starts were up 27.7 percent year-over-year.

Groundbreaking on homes in the U.S. rose in February, and permits for construction climbed to their highest level since 2008, a positive indicator for the continuing housing market recovery.

New housing starts rose 0.8 percent last month to a 917,000-unit annual rate. Permits for future construction jumped 4.6 percent to a 946,000-unit rate, the quickest since June 2008.

Starts for single-family units, which comprise about two-thirds of the combined monthly total with multi-unit housing, edged up 0.5 percent in February to a 617,000-unit rate, also the highest level since June 2008.

Home building added to economic growth last year for the first time since 2005 and the figures on starts and permits reinforced the view that it will provide stronger support this year.

A lack of entitled land prepared for homebuilding, slowed foreclosure processes in some states and a dearth of homes on the market has helped push prices higher. These factors are expected to drive up the rate of new home construction throughout 2013.

Still, the housing market remains a shadow of its former self, with starts at less than half of their pre-recession peak and near levels seen in the early 1990s.