New-home construction surged in February as builders sought to take advantage of tight existing-home inventory. 

Housing starts, which include construction of both new single-family and multifamily residences, rose 9.8% month over month to a seasonally adjusted annual rate of 1,450,000 units, the U.S. Census Bureau and the U.S. Department of Housing and Urban Development said in a press release. Year over year, starts were down 18.4%.         

New single-family home starts rose 1.1% from January’s revised annual estimate to 821,000, while multifamily starts surged 24.1% to 608,000. On a yearly basis, the rate of single-family starts was down 31.6%, while multifamily was up 14.3%. 

Permits, a leading indicator of future new-home supply, rose 13.8% month over month and fell 17.9% year over year to 1,524,000 units, while housing completions jumped 12.2% month over month and 12.8% year over year to an annual rate of 1,557,000.        

“One of the drivers behind higher builder sentiment is the lack of existing-home inventory available for sale,” First American deputy chief economist Odeta Kushi said. “The shortage of existing-home inventory means more and more buyers could turn to the new-home market. As the inventory of new, completed homes rises, it will provide some much-needed relief to a supply-starved market and put downward pressure on new-home prices.”