Housing Starts Surge in February

Construction of new homes unexpectedly surged in February, after falling for eight months.

Housing starts rose to a seasonally adjusted annual rate of 583,000 last month, up 22% from a revised 477,000 in January, according to the Commerce Department. It was the first time housing starts increased since June, when they rose 11%.

While the surge in new construction was a welcome sign for the nation’s battered housing market, analysts warned that the increase could be short lived.

Chief U.S. economist at High Frequency Economics, Ian Sheperdson, wrote, “With new home sales still falling and the months’ supply at a record, there is no reason for homebuilding to rise…This is a temporary rebound, not a recovery.”

New home construction surged in the Northeast, jumping nearly 89% last month. Starts also increased in the Midwest and the South.

In the West, where the housing market was overbuilt in the boom years and where there is a glut of foreclosed homes, starts declined nearly 25% versus the previous month.