The piles of snow have (mostly) melted, but the effects of last month’s winter storms continue to be felt by the housing industry and the economy.

According to data released Tuesday by the U.S. Census Bureau, overall housing starts dropped 5.9% on a monthly basis in February, to a seasonally adjusted level of 575,000. Single-family starts also slipped slightly in February, falling 0.6% to a seasonally adjusted level of 499,000. 

“February's drop in housing starts tells us more about the weather than anything else, with the declines concentrated in the Northeast and the South which were hit by mid-month storms,” said Nigel Gault, chief U.S. economist for IHS Global Insight in Lexington, Mass.

On a monthly basis, total permits declined 1.6% to a seasonally adjusted pace of 612,000. Single-family permits dipped just 0.2% to a 503,000-unit pace, leading some industry watchers to suggest, combined with the single-family starts data, that the market is finding solid ground. 

“Single-family starts and permits were relatively unchanged, down only 0.6% and 0.2% sequentially, respectively,” noted Michael Rehaut, an analyst with J.P. Morgan. “As a result, we believe this data continues to demonstrate stabilization, as starts and permits remain within a fairly tight range. Moreover, while we point to the builders continuing to start homes ahead of the expiration of the tax credit on April 30th, we believe the more stable economic backdrop will continue to support stable to slightly improving housing demand over the next 24 months.”

Others aren’t so sure about stabilization just yet.

“Housing permits, which are less sensitive to weather, fell 1.6%, but they are still running ahead of starts, usually a sign that starts will rise in the future,” Gault observed, adding: “Builders have been hoping that the renewed home buyers' tax credit will spark a burst of sales agreements ahead of its April 30 [expiration]. However, as yet there is little evidence of such a surge, and builder confidence deteriorated in March.”

Carl Reichardt, an analyst with Wells Fargo, agreed. “We believe builder sentiment is starting to lean toward a mildly disappointing spring selling season.”

Mercifully, annual comparisons for permits and starts remain in positive territory. Total housing permits were up 11.3% in February compared to the same month one year ago; single-family permits were up 32.0% for the same time frame. In terms of starts, total housing starts moved up just 0.2% on an annual basis in February, but single-family starts jumped 39.8% on an annual basis.

Still, the housing market remains unpredictable in the near future. “New homes continue to face stiff competition from distressed properties coming on to the market at bargain prices, making it hard for home building to revive even though the supply of new homes on the market is dwindling. As the year progresses, though, we expect some improvement in new home sales as employment begins to rise, and expect a gradual increase in housing starts both to meet that demand and to stabilize inventory,” Gault said.

Alison Rice is senior editor, online, at BUILDER magazine.