U.S. housing starts sag

U.S. housing starts fell in February as winter blizzards held down activity in much of the country.

Data from the U.S. Commerce Department showed Tuesday construction of new homes and apartments fell 5.9 per cent in February to a seasonally adjusted annual rate of 575,000 units. That was slightly higher than the 570,000 economists were expecting.

The decline highlighted the challenges facing builders as they struggle to emerge from the worst housing slump in decades.

"The good news is, starts have stabilized around the 550,000 mark," BMO economist Jennifer Lee said. "But the bad news is, construction hasn't been lifted more meaningfully."

Lee also noted that starts in the U.S. South, which was not touched by the blizzards that rocked the Northeast, declined by an even greater 15.6 per cent. But increases in activity in the Midwest and West were "reassuring," she said.

January activity was revised up to a pace of 622,000 units, the strongest showing in 14 months.

Homebuilders are trying to emerge from a severe housing downturn. A rebound in housing is seen as critical to sustaining the overall economic recovery.