Housing construction likely slipped in February in part because of severe winter snowstorms

Ahead of the Bell: Housing starts

WASHINGTON — Housing construction, which hit a six-month high in January, likely slipped in February, reflecting in part the major snowstorms that hit many parts of the country. The housing industry in good times is a major generator of jobs and economic growth.

Economists surveyed by Thomson Reuters expect housing construction to fall by 3.6 percent to a seasonally adjusted annual rate of 570,000 in February. The Commerce Department will release the new report at 8:30 a.m. EDT Tuesday.

Construction activity had risen to a six-month high of 591,000 units in January, but economists believe the snowstorms that blanketed many parts of the country depressed building starts last month.

The economists were looking for applications for new building permits, considered a good sign of future activity, to dip to an annual rate of 610,000 units in February, down from a January level of 621,000 units.

Housing experts are forecasting that home sales will pick up in the near term but will weaken after tax credits expire at the end of April.

The increase in January activity left home construction 23 percent above its record low. But even with that improvement, home building is far below the annualized rates of 1.5 million housing starts seen in more normal times.

Housing set records in sales and construction during the boom years but more recently has undergone a painful bust, a downturn which helped push the overall economy beginning in December 2007 into the worst recession since the 1930s.

The National Association of Home Builders reported Monday that its survey of builder sentiment dropped by two points to 15 in March, underscoring the gloom in the housing market.

Builders said that harsh winter weather and the competition from deeply discounted foreclosures were dampening sales prospects. They said they were seeing fewer prospective buyers and were feeling less optimistic about the likelihood of sales over the next six months, according to the latest survey.

Sales of new homes plunged 11 percent to a record low in January, the third consecutive monthly decline. Sales of previously occupied homes were down 7 percent, the sharpest drop since last June.