Housing Starts Surge in February is an Aberration, Bottom Still Not Reached, Say MF Industry Leaders

By Anuradha Kher, Online News EditorNew York–Overall housing starts in February surged 22 percent from January, mainly due to a nearly 80 percent increase in multifamily starts during the same period. The total number of multifamily starts in February rose to 212,000 as compared to 118,000 in January, while the overall starts totaled 583,000. Even so, on a year-on-year basis, multifamily starts are down 40 percent while overall starts are down 47 percent.“Housing starts figures are so anemic right now that a small recovery is showing up as a big percentage,” Nick Ingle, director of capital markets at Hendricks and Partners, tells MHN. “In addition, credit markets were in a bad shape in January, so there were a lot of delayed projects which might be showing up in February.” Ingle also points to the fact that the multifamily, as well as overall starts for January were at all-time lows (118,000 and 477,000 respectively). “There’s nothing to get excited about just yet,” adds Ingle.However, building permits, which are a good gauge of future construction, rose less than starts, showing that construction may again slow. “It’s a statistical blip and these numbers can’t be sustained,” Robert Bach, senior vice president and chief economist at Grubb & Ellis Co., tells MHN. He believes March will likely see starts numbers in the range of 150,000 units.“Apartment starts figures are always volatile and have tended to go up in the month of February. Some of it has to do with seasonality. My guess is that there is an increasing number of lenders and owners who are anticipating that a decline in homeownership will mean increased demand for rental housing,” adds Bach.Bernard Markstein, senior economist and director of forecasting at the National Association of Home Builders (NAHB), tells MHN, “Multifamily starts figures are volatile and they jump around from month to month. It could have been a couple of large projects or a university building student housing; there’s no way to see that.”“Either way, it is definitely an aberration and the multifamily sector will continue to face stress due to lack of financing. I don’t think we have reached the bottom yet and are likely to see slight declines in the next quarter.”