Housing starts decline, but top estimates
Single-family dwellings reach a 17-year low as market slump continues.
NEW YORK (CNNMoney.com) -- Initial construction of U.S. homes was higher than expected last month, although down from the prior month as single-family housing starts reached a 17-year low.
Privately owned housing starts fell to a seasonally adjusted 1,065,000 annual rate in February, according to the Census Bureau report released Tuesday. The rate was down 0.6% from January, 28.4% from a year earlier, and 55% from the peak it reached just over two years ago.
But the number topped the 995,000 consensus of economists surveyed by Briefing.com.
Permits for new building declined 7.8% from January to 971,000, well below the 1.02 million consensus forecast.
The weakness was primarily in single-family housing. Starts weakened 6.7% from January to an annual rate of 707,000, the lowest level in 17 years, while permits fell 6.2% to 639,000.
"Single-family is the core of the housing market and it appears to be deteriorating" said Mike Larson, real estate analyst for research firm Weiss Research.
"The construction market is still weak," Larson said. "The market is struggling to find the level of starts that will be in line with demand."
The housing market has been in decline since last summer when the subprime mortgage crisis burst the housing bubble. Since then, lending standards have tightened and mortgage defaults have increased.
Now, home prices have fallen to record lows as a major glut has developed in the face of weak demand from buyers.
The downturn in the housing market has caused homebuilders like D.R. Horton Inc. (DHI, Fortune 500), Plute Homes Inc. (PHI), Lennar Corp. (LEN, Fortune 500) and KB Home (KBH, Fortune 500) to post steep losses in recent months.