Builders pulled back on new housing construction in February. This comes from new figures from the U.S. Commerce Department. Why the decline? Housing starts declined 22.5 percent from January. This is the second-slowest pace on record, and is in response to concerns over interest rates, energy costs, and tightened lending standards.

National Association of Home Builders Chief Economist David Crowe acknowledged, "While our latest member surveys showed a slight uptick in expectations for the future, there are just too many uncertainties out there for most builders and buyers to comfortably move forward with a new-home project at this time. We need to see several months of consistent improvement in economic factors, plus concrete signs that the flow of credit to housing is improving, in order for the industry to return to a steady recovery and facilitate job growth."

The declines in February housing starts were broad-based, reaching to every sector and region of the country. While single-family starts declined 11.8 percent to a seasonally adjusted annual rate of 375,000 units, multifamily starts – which tend to display greater volatility on a month-to-month basis – declined 46.1 percent to a rate of 104,000 units. Regional declines amounted to 37.5 percent in the Northeast, 48.6 percent in the Midwest, 6.3 percent in the South and 28 percent in the West.

Despite this the current downtown, builder confidence actually rose in March, rising to the highest level since May 2010.

Crowe reports, "While many home buyers are still holding off on making a purchase, builders did indicate slightly increased optimism about the future with a two-point gain in the HMI component gauging sales expectations for the next six months. In fact, prevailing indicators portend some improvement in the overall economy, which should generate modest housing market gains later this year."

Regionally, results were mixed. The Northeast saw builder confidence decline. The South and West were up. And the Midwest remained flat.

Much of the state of the housing market depends on the state of the overall economy. According to the Federal Open Market Committee, "The economic recovery is on a firmer footing, and overall conditions in the labor market appear to be improving gradually."

Published: March 21, 2011

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Carla Hill, M.A., works on the Realty Times staff as Managing Editor for our online publication. She also is Producer for the real estate news channel, seen daily on RealtyTimes.com and on video newsletters nationwide.