Home Construction Slows, But Building Plans Surge

Enlarge Paul Sakuma/AP

The housing market still has a long way to go before a full recovery is under way. The current pace of construction is barely half the rate considered healthy.

The housing market still has a long way to go before a full recovery is under way. The current pace of construction is barely half the rate considered healthy.

U.S. builders started work on slightly fewer homes in February. But they began laying the ground work for a turnaround later this year by requesting the most building permits in any month since October 2008.

The Commerce Department said Tuesday that builders broke ground on a seasonally adjusted annual rate of 698,000 homes last month. That's down 1.1 percent from January's revised level of 706,000, also the highest since October 2008.

Building permits, a gauge of future construction, jumped 5.1 percent last month to 717,000. Two-thirds are for single-family homes, which are critical to a housing recovery.

It can take up to 12 months for a builder to obtain a permit and construct a single-family home.

Ian Shepherdson, chief U.S. economist at High Frequency Economics, said he expects further gains over the next few months, based on a measure of builder confidence that has increased in five of the past six months.

"Housing will add to growth all year, and beyond," Shepherdson said.

Seasonally adjusted annual rate, in thousands

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Home Construction Slows, But Building Plans Surge