Multifamily Starts Plunge by 51%

The number of apartment units under construction at the end of February plunged to 180,000 dwellings on a seasonally adjusted annual basis, according to new figures released by the Commerce Department. The government found that construction of buildings with five or more rental units fell 51.4% compared to February 2009. The sequential decline was less startling: down 6.7%. (The numbers represents dwellings that are "under construction" at month's end, not necessarily started.) The poor performance is being blamed, in part, on severe snowstorms in the mid-Atlantic and Northeast. Construction of one-unit dwellings fared better in February: 301,000 (seasonally adjusted), a slight increase from the January rate but an 18% decline from February 2008. Total housing starts-which include both one-to-four family and multifamily construction-fell by almost 6% in February from January but posted a small gain compared to the same month a year ago. The government's report on housing comes a day after the National Association of Home Builders said builder confidence in the market is falling due to poor weather conditions and distressed property sales, the latter of which is suppressing housing prices. Also, there are concerns among both builders and lenders that the government's departure from the MBS market as a buyer could cause mortgage rates to rise in the coming weeks.