U.S. home construction plunges 17 percent in February

WASHINGTON – Construction of new homes plummeted in February, as fierce winter weather froze housing starts in the Northeast and Midwest.

The Commerce Department said Tuesday that builders began construction at a seasonally adjusted annual rate of 897,000 homes in February, a 17 percent plunge from January. Housing starts slid 56.5 percent in the Northeast and 37 percent in the Midwest.

The brutal cold spell across the Northeast and Midwest likely caused construction activity to slow last month. Fewer would-be buyers are touring open houses, while consumers seem intent on using their savings at the gasoline pump to pay down debt instead of spending their gains on big-ticket items such as housing.

The National Association of Home Builders/Wells Fargo builder sentiment index released Monday slipped to 53 in March, the third straight monthly decline. Readings above 50 indicate more builders view sales conditions as good, although the index showed a drop in buyer traffic.

The historically low mortgage rates and strong hiring in recent months should eventually drive an increase in home buying. But sales have been muted after a relatively weak 2014.

Sales of new U.S. homes were basically flat in January, falling 0.2 percent from the previous month to a seasonally adjusted annual rate of 481,000, according to a separate Commerce Department report.