WASHINGTON, March 18 (UPI) -- The Commerce Department said Tuesday that U.S. housing starts posted their largest decline in nine years during February, knocked down as winter storms hampered construction in most of the country.
The government said housing starts fell 11 percent in February to a seasonally adjusted annual rate of 1.622 million units after rising 0.2 percent in January.
The decline was the largest since a 17-percent plunge in January 1994.
Economists on Wall Street were expecting housing starts to decline to an annual rate of 1.72 million units from January's originally reported 1.85-million-unit pace, which the government revised to a 1.822-million pace.
The government agency also reported building-permit authorization, an indicator of future construction, rose 0.4 percent to a seasonally adjusted annual rate of 1.786 million units after falling 5.6 percent in January. Economists on Wall Street were expecting permits to decline to a 1.7450-million-unit rate.
Analysts noted that despite the sharp decline housing activity is been fuelled by favorable mortgage rates. Builders say lower borrowing costs are providing a cushion against the slowdown in the economy.
Housing accounts for more than half of all U.S. construction and boosts the economy by stimulating spending on building materials, home appliances, and home furnishings.
Housing starts measure the number of residential units on which construction is begun each month.
Changes in the rate of housing starts suggest demand for homes and the outlook for the construction industry. Trends in housing starts data carry clues for the stocks of home builders, mortgage lenders and home furnishings companies. Commodity prices such as lumber are also very sensitive to housing industry trends.
The latest report from the Commerce Department showed that single-family home construction, which accounts for more than two-thirds of all residential construction, dropped 13.7 percent in February after rising 2.1 percent in January.
Starts of multifamily homes, such as apartments and condominiums, rose 1.9 percent after falling 7.6 percent during the first month of 2003.
The report showed by region, starts sank 19 percent in the Midwest, dropped 9.4 percent in the South, fell 11.1 percent in the West and was unchanged in the Northeast.