Housing Starts Jump 8% in February, Led by Multifamily Construction

Housing starts rose 8% in February to a seasonally adjusted annual rate of 1.52 million units, exceeding economist expectations and marking the strongest month for new construction activity since last June. The increase was driven primarily by a surge in multifamily starts, which jumped 15% month over month.

The multifamily sector has been buoyed by strong rental demand and a pipeline of projects that were approved during the pandemic-era building boom. Developers are particularly active in markets with strong population growth and job creation, including Dallas, Phoenix, and the Research Triangle area of North Carolina.

Single-family starts also improved, rising 4% from January. Builders report that lower mortgage rates and improved buyer traffic have given them confidence to increase production. Several publicly traded homebuilders have raised their guidance for 2026, citing better-than-expected sales conditions in the first quarter.

The construction industry continues to face labor shortages and elevated material costs, though both pressures have eased somewhat from their pandemic peaks. Lumber prices are down roughly 30% from their 2024 highs, and builders report that subcontractor availability has improved in most markets.

Housing economists view the February data as an encouraging sign for the broader affordability picture. The U.S. needs to build approximately 1.5 to 1.7 million new homes per year to keep up with household formation and replace aging housing stock. Sustained construction at the current pace would begin to chip away at the estimated 4 to 5 million unit housing deficit that has built up over the past decade.