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Wintry weather hits US property market with starts and permits falling in February, reports show

After starting the year on an upward note, housing starts fell 5.9% in February, returning to the December 2009 rate, according to data released by the Department of Housing and Urban Development and the Commerce Department’s Census Bureau.
According to the joint report privately owned housing starts were at a seasonally adjusted annual rate of 575,000 units in February, down 5.9% from January’s revised estimate of 611,000 and only 0.2% above the February 2009 rate of 574,000.
Single family housing starts were at a rate of 499,000, down 0.6% from January’s revised rate of 502,000. The February rate for starts in buildings with five or more units was 58,000.
According to Paul Dales, a US economist at macroeconomic research consultancy Capital Economics, said most of the 5.9% fall in US housing starts can be attributed to the severe winter weather that prevented homebuilders from breaking new ground last month. He warned the outlook for home building remains bleak.
‘Homebuilding activity remains very low by historical standards and is set to remain that way for some time. The problem is that the market is saturated with excess supply,’ he explained.
‘There are currently 3.8 million homes for sale and that is 8.4 months of supply at current rates of sale. Moreover, we estimate that another five to six million homes may yet be foreclosed. In total, that would be 21 months of supply,’ he added.
Privately owned housing units authorized by building permits, a future indicator of housing starts, also declined this month. February’s seasonally adjusted annual rate of 612,000 units was down 1.6% from January’s revised rate of 622,000, and 11.3% higher than the February 2009 rate of 550,000.
One increase from January to February was the rate of housing completions. The reports said housing completions in February were at a rate of 700,000, up 5.4% above the January’s revised rate of 664,000. This rate is 15.5% lower, however, than the February 2009 rate of 828,000.