Housing starts in February fell 7% from January and 4% from the same month last year to a seasonally adjusted annual rate of 1,236,000, the Census Bureau and Dept. of Housing and Urban Development reported Friday. The drop was driven by sharp declines in multifamily starts.

Single-family housing starts in February were at a rate of 902,000, 2.9% above the revised January figure of 877,000 and also 2.9% ahead of February, 2017. The February rate for units in buildings with five units or more was 317,000, down 28% sequentially and 19.1% year-over-year.

Building permits fell 5.7% from January to a seasonally adjusted annual rate of 1,298,000, still 6.5% above the February 2017 rate of 1,219,000. Single-family authorizations fell 0.6% to a rate of 872,000 but remained 4.6% ahead of the same month last year. Authorizations of units in buildings with five units or more were at a rate of 385,000 in February, down 14.8% from January but up 13.2% from a year earlier.

Housing completions in February were at a seasonally adjusted annual rate of 1,319,000, 7.8% above the revised January estimate of 1,224,000 and 13.6% above the February 2017 rate of 1,161,000. Single-family housing completions in February were at a rate of 895,000, up 3.0% from the revised January rate of 869,000. The February rate for units in buildings with five units or more was 418,000, up 21.5% sequentially and up 9.4% year-over-year.

“Housing starts are the source of future completions, and while builders broke ground on fewer homes overall this month compared with February 2017, it was mostly due to a drop in multi-family housing starts," said Mark Fleming, chief economist at First American. "Single-family housing starts increased 2.9% compared with last February. Housing completions, the number of net new homes added to the housing stock, increased dramatically compared with a year ago. This signals some relief for the supply shortage. The rise in permits, the leading indicator of housing starts, in conjunction with the dramatic rise in construction employment this month, signals an upward trajectory for housing starts for the spring home buying season. Residential construction employment is easing as a headwind to future housing starts.”