U.S. Housing Starts Jump 9%
But Permits for Future Drop

U.S. home construction unexpectedly surged in February, but permits for future building fell.

Housing starts increased 9.0% to a seasonally adjusted 1.525 million annual rate, the Commerce Department said Tuesday. January starts plunged 14.3% to 1.399 million.

The 9.0% increase in February construction exceeded analysts' expectations. A Dow Jones Newswires survey of 23 economists predicted February housing starts would rise 3.0% to a 1.450 million annual rate.

While starts rose last month, home builders' confidence could be slipping. The National Association of Home Builders this week released its latest gauge on how builders view future sales. The March index fell to 36 from 39, the first drop in six months amid concerns about the subprime-mortgage market.

The housing sector retreated last year, reducing the U.S. economy's growth rate, after a long run up in sales and construction. Luxury-home builder Toll Brothers Inc. recently said its first-quarter profit dropped 67% due to hefty writedowns and other costs.

In its report Tuesday, the government said building permits last month decreased by 2.5% to a 1.532 million annual rate. Economists expected a more modest 0.7% decline to 1.560 million. Permits fell 2.6% in January to 1.571 million, revised up from a previously reported 2.8% drop.

Problems in the subprime market could have repercussions. Loan delinquencies and foreclosures are going up. Bad debts winding through a long foreclosure process could put upward pressure on inventories. And tighter lending standards might hurt home sales.

After two solid gains, new-home sales plummeted 16.6% to 937,000 in January, the latest month for which data are available. February's report is due out next week.

Still, Tuesday's report showed February single-family housing starts increased 10.3% to 1.220 million. Construction of housing with two or more units rose 4.1% to 305,000; within that category, groundbreakings of multifamily homes, which have five or more units, fell 2.2%.

Regionally, housing starts fell 29.7% in the Northeast and 14.4% in the Midwest but climbed 18.0% in the South and 26.4% in the West.

Nationwide, an estimated 106,200 houses were actually started in February, based on unseasonally adjusted figures. An estimated 110,100 building permits were issued last month, also based on unadjusted figures.

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