WASHINGTON — The number of new housing projects that builders broke ground on in February rose sharply, defying economists' forecasts. The Commerce Department reported Tuesday that construction of new homes and apartments jumped 22.2 percent from January to a seasonally adjusted annual rate of 583,000 units. Economists were expecting construction to drop to about 450,000 units.
February's pickup was led by a big increase in apartment construction. By region, all parts of the country reported an increase in overall housing construction except for the West, which led the housing boom and has been hard hit by the bust.
In Lexington, the total number of building permits in January and February of this year grew by 16 percent compared to last year for a new total of 2,003, said Dewey Crowe, director of building inspection for the Lexington-Fayette Urban County Government. February was especially strong in permits for single-family homes, with 83 filed, compared to 26 in January. "Overall, the numbers look a little better," Crowe said. "We'll have to see how the trends develop."
Crowe did not have figures for apartment buildings in January and February; however, he noted that the number of apartment building permits increased between 2007 and 2008. In 2007, builders obtained 46 permits for a total of 502 units. In 2008, builders obtained 58 permits for a total of 1,324 units.
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Some economists said the new housing figures offer a glimmer of hope. "While it may be premature to call an absolute bottom in residential construction, we are clearly getting close," said Adam York, economist at Wachovia.
Overall housing construction activity fell to a pace of 477,000 units in January, according to revised figures. That was a little higher than first reported but still marked a record low. Applications for building permits, considered a reliable sign of future activity, also rose in February by 3 percent to an annual rate of 547,000. Economists were expecting permits to fall to a pace of 500,000 units.
Even with February's rare burst of activity, housing construction is down a whopping 47.3 percent from a year ago. "This is a temporary rebound, not a recovery," said Ian Shepherdson, chief U.S. economist at High Frequency Economics.
The collapse of the once high-flying housing market has been devastating to the United States' economic health. Its spreading fallout has contributed to big pullbacks by consumers and businesses alike, plunging the economy into a recession now in its second year.
The Obama administration has announced a $75 billion program to stem skyrocketing home foreclosures, which have dumped even more properties on an already crippled market.
More than 2 million American homeowners faced foreclosure proceedings last year, and that number could soar as high as 10 million in the coming years depending on the severity of the recession, according to a report last month by Credit Suisse.
Home mortgages are harder to come by because of the credit crisis, and unemployment is at a quarter-century peak of 8.1 percent, which will make it difficult for the depressed housing market to snap back.
Herald-Leader business writer Sarah Vos contributed to this report.