Following the warmest January on record that helped spur a 16-percent jump in new-home construction, the U.S. housing market showed signs of cooling in February, with total housing starts declining 7.9 percent to a seasonally adjusted annual rate of 2.12 million.
Single-family home construction fell 2.3 percent to 1.8 million units. Multifamily starts fell 30.4 percent to 320,000 units after posting an unsustainably high level of 460,000 units in January.
"Housing starts have received a boost from unusually mild winter weather, even in February, and we expect to see these numbers move further down in the months ahead," said NAHB Chief Economist David Seiders. "Indicators that measure housing demand -- home sales, applications for home mortgages and our own survey of single-family builders -- show that the cooling process has begun."
Seiders added that the evolving slowdown is actually a healthy development and should not lead to any major contraction in the housing markets.
"Last year's record-level of housing starts and double-digit price appreciation were unsustainable, and encouraged many investors and speculators to enter the market," he said. "With demand slowing, we expect to see price appreciation also falling back into the single-digit range, and that will discourage short-term speculators from jumping into the market. We anticipate another solid year for housing in 2006, with new-home construction and new home sales down about 7 percent from last year's all time highs."
Regionally, construction of new homes and apartments for the month was down 23.5 percent in the Northeast, 10.4 percent in the Midwest and 11.2 percent in the South. Starts posted a 7.9 percent gain in the West.
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