February Housing Starts: Every Incentive to Keep Pushing

• February housing starts totaled 1.77 million (SAAR), up 6.8% from January 2022 and 22.3% from February 2021, according to the U.S. Census Bureau.
• Housing permits issued in February were down 1.9% from January, but up 7.7% from a year ago, to 1.86 million (SAAR).
• 1.31 million (SAAR) homes were completed in February, up 5.9% from January, but down 2.8% year-over-year.

Housing starts in February rose to a seasonally adjusted rate not seen since 2006 – a much needed reprieve for the low inventory that continues to plague the current market. But even so, homes started today will take months to complete, and building our way out of the inventory shortage will take many more months and years of above-average building activity. But that level of activity is possible – despite supply chain constraints and rising lumber prices, builder confidence remains strong. And elevated permits data indicate a sustained desire by developers to meet the moment and continue to build at this recently heightened pace. With demand from buyers expected to remain strong and home prices expected to rise another 17% in the coming year, builders have every incentive to keep their foot on the gas and power through short-term difficulties. As long as future levels of builder confidence match the confidence builders are expressing in the current market, it's reasonable to expect building activity to remain robust going forward.