Homebuilding slows but permits hit their highest level in three years

Homebuilders began work on fewer houses in February but made plans for a boost in construction down the road as building permits hit their highest level in more than three years. 

Construction starts fell 1.1 percent to a seasonally adjusted annual rate of 698,000 homes last month from January's revised level of 706,000, the best showing since October 2008, the Commerce Department reported Tuesday. 

That is 34.7 percent higher than the 518,000 starts in February 2011. 

A positive blip on the housing-sector radar showed up in February building permits data — a measure that provides a look into future building — which were up 5.1 percent to 717,000, the majority for single-family homes.

Permits for single-family homes in February were at a rate of 472,000 — just about 66 percent of all permits — a 4.9 percent increase above January's revised figure of 450,000. Permits for multi-family units were at a rate of 219,000 in February.

Builders can take upward of a year to get through the permitting and the construction process of a single-family house.

While builders' confidence was flat this month, the outlook is brightening for the future, a positive sign as the housing sector makes a gradual improvement. Builders have said they expect the recovery to creep along this year but pick up pace in 2013. 

Construction of single-family houses, which represent about 70 percent of housing starts, were down 9.9 percent in February, to 457,000 from the 507,000 in January, following four straight months of increases. Apartment construction continued to help offset that drop. 

Construction of new homes constitutes just 20 percent of the housing sector but has a big economic effect — three jobs and 90,000 a year in taxes per unit, according to the National Association of Home Builders.