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Homebuilders stocks down on housing starts report

Homebuilder shares slide after report shows builders broke ground on fewer homes in February

Associated Press – 20 hours ago

http://finance.yahoo.com/news/homebuilders-stocks-down-housing-starts-182435037.html

LOS ANGELES (AP) -- Shares of U.S. homebuilders slid on Tuesday after the government said builders started working on fewer homes last month than they did in January.

The Commerce Department reported that builders broke ground on a seasonally adjusted annual rate of 698,000 homes in February. That represents a decline of 1.1 percent from January's pace, but an increase of 34.7 percent from a year earlier, and the highest level since October 2008.

Still, construction of single-family homes, which makes up roughly 70 percent of housing starts, fell nearly 10 percent, ending a four-month streak of increases leading to an 18-month high.

There had been strong gains during the normally slow winter months because of unusually warm winter weather, which helped drive more construction activity, said Mark Vitner, a senior economist at Wells Fargo Securities.

Despite the slump in homebuilders' shares, there were signs of continued improvement in the housing market. Building permits, a gauge of future construction, jumped 5.1 percent last month to 717,000, and two-thirds were for single-family homes.

Builders are starting to see some signs of progress. They are increasingly confident after seeing more people express interest in buying a home. Mortgage rates are hovering near record lows below 4 percent. And home sales started to rise at the end of last year.

But the housing market still has a long way to go before a full recovery is under way. The current pace of construction is barely half the rate considered healthy, as are the number of permits being requested. Most analysts say it could be years before the industry returns to full health.