US February housing starts come in ahead of forecasts

Activity in the US housing market was keeping up a brisk pace at the start of 2020 and some economists still saw scope for growth to resume in the latter half of the year assuming the economy returned to something closer to normal.

According to the Department of Commerce, in seasonally adjusted terms, in February US housing starts fell at a 1.5% month-on-month pace to reach an annualised pace of 1.624m (consensus: 1.5m).

To take note of, January's print had been revised higher from 1.567m.

"The rise in single-family housing starts in February pre-dates the outbreak of the coronavirus, and the outlook for starts has worsened considerably over the next few months," said analysts at Capital Economics.

"It will take time for the economy to recover, but assuming the country begins to get back to normal in the second half of the year, pent-up demand and a lack of inventory will encourage builders to restart projects."

Analysts at Barclays Research were of a broadly similar view, telling clients on 13 March: "While we still expect housing starts activity to gradually improve in 2020 after a rough patch during 2018/19 supported among other things by low interest, the possible disruptions to the economy from the effect of COVID-19 pose downside risks to our view."

Housing permits on the other hand undershot economists' forecasts, falling by 5.5% against January to 1.464m (consensus: 1.5m).

Housing starts were 39.2% above their year earlier level in February.