Housing Starts Fell 22.5% in February

Housing starts fell 22.5% in February, well below most analysts’ estimates and to the lowest rate in almost two years, according to Commerce Department data.

In a joint release, the Census Bureau and Department of Housing and Urban Development said starts fell to a seasonally adjusted rate of 479,000 units, down from a revised 618,000 for January and 20.8% lower than a year earlier.

The monthly drop was the largest since March 1984. February’s decrease comes on the heels of a 14.6% increase in starts for the first month of 2011.

Analysts polled by Econoday were expecting housing starts to come in at 560,000 with a range of estimates between 540,000 and 590,000. Economists surveyed by MarketWatch projected starts to come in at 570,000 for February. Single-family starts fell 11.8% in February to 375,000 from a revised 425,000 for January.

Permits for new homes in February declined 8.2% to 517,000 from a revised 563,000 for January and remain 20.5% below the year earlier estimate of 650,000.

This low level of starts is actually good news for housing, and we expect to see starts stay low until more of the excess inventory of existing homes is absorbed.