• February housing starts fell 10.3% from January and 9.3% from February 2020, to 1.421 million (SAAR), according to the U.S. Census Bureau.
• Building permits fell 10.8% from January, to 1.682 million (SAAR), but were up 17% from a year ago.
• Housing completions rose 2.9% from January and 5% from a year ago, to 1.362M (SAAR).

February’s unexpectedly steep monthly declines in key home construction metrics offer some evidence that longstanding challenges are holding activity back somewhat. But while it does seem builders took their foot off the pedal somewhat last month, it’s important to keep the bigger picture in focus and not overreact to what may turn out to be a one-month blip. The monthly decline in permits, the largest one-month decline since April, and downshift in starts can likely be attributed at least in part to severe winter weather experienced across much of the country — permits fell strongly in the South, and starts were down roughly a third in the Midwest. Relentless increases in lumber prices are also likely eating into activity — by some measures, lumber prices have surged almost 59% over the past year, more than any 12-month period since 1947. Even so, there remains plenty to be optimistic about. Despite the monthly declines, both permits and starts are still near their highest levels in more than a decade. And the annual decline in starts masks the fact that the reading from February 2020 — just before the pandemic struck the U.S. in earnest — was so strong. With the supply of existing homes at all-time lows, builders will continue to have a key role to play in addressing the inventory shortage for a market chock full of eager home shoppers. It may go down as a loss, but February’s home construction figures were the latest indication that the homebuilding sector has more room to run.