WASHINGTON – U.S. builders broke ground on new homes at a faster pace in February, a sign that the developers expect the solid sales growth this year despite higher mortgage rates.
Housing starts rose 3 percent last month to a seasonally adjusted annual rate of 1.3 million, the Commerce Department said Thursday. Almost all of the profit came from the construction of single-family homes, which rose 6.5 percent. The construction of buildings fell by 7.7 percent in February.
Americans are looking for the purchase of houses and on the labour market has improved, but the supply of homes for sale is relatively low, even with additional construction. The increase in the construction starts points to bigger sales this year even though the mortgage rates have climbed up from recent lows, making monthly housing payments higher and hurting the affordability.
Housing starts are running 7.5 percent higher than during the first two months of 2016. Builders last year started the most new homes since 2007, the year the Great Recession began when the housing market began to falter.
Construction increased last month in the West, offsetting declines in the Northeast, Central and South which were largely caused by a decline in the apartment building begins.
Still, growth in the construction of a house also seems to be relativized. Building permits_an indicator of future home construction_slipped 6.2 percent in February to an annual rate of 1.2 million.
Builders are adding supply to the market, just not enough to make the tight inventory of existing homes, the largest part of the real estate market. The National Association of Realtors has reported that the number of existing homes on the market is near the lowest level since 1999, while the inventory of new homes on the market is near an eight-year high.
Question among home buyers is strong if the unemployment rate is baptized to a healthy 4.7 percent. Yet buyers will probably borrow at higher rates than last year, a factor that could limit the size of the price and the sales growth.
The average 30-year fixed-rate mortgage had a 4.21 percent interest rate, mortgage buyer Freddie Mac said last week. This is a strong increase from a 52-week low rate of 3.41 percent.