U.S. housing starts took an unexpected upward turn in February, rising to a seasonally adjusted 583,000 units – a hopeful sign for the economically devastated homebuilding industry, but still well below the more than one million units that were being constructed annually before the housing and credit markets imploded last fall.

The National Association of Homebuilders attributed the 22.2 percent jump in housing starts – the first in eight months – to an increase in the often volatile multifamily housing market. “While welcome news, this gain only reflects a modest rebound from January, which was the worst month in history for new home production,” said David Crowe, the association’s chief economist.

Regionally, the only area of the country to post a lower rate of total housing starts in February was the West, with a 24.6 percent decline. The Northeast posted the largest gain, an 86.6 percent increase in starts, reflecting a rebound from a nearly equal decline the previous month. Meanwhile, the Midwest posted a 58.5 percent gain following a steep decline in January and the South notched a 30.2 percent gain.

“Builders did pull a larger volume of single-family permits in February, suggesting a glimmer of hope for the prime home buying season, which is near at hand,” said NAHB chairman, Joe Robson, a Tulsa, Oklahoma homebuilder. “That said, we realize there’s a need to be extremely cautious in terms of new building activity going forward, because there’s still quite a lot of inventory out there that needs to be absorbed as foreclosures continue to flood the market in many areas.”
    
Building permits, long considered to be a reliable indicator of future building activity, rose three percent in February to a seasonally adjusted annual rate of 547,000 units – an 11 percent gain in single-family unit permits but a 10.8 percent decline in multifamily permits.

Meanwhile, softwood lumber producers in the western U.S. where most of the structural lumber used by the nation’s homebuilders is manufactured, remain very leery of economic assessments suggesting that the softwood lumber market may stage a modest recovery yet this year. In early March, an economist with the Western Wood Products Association told the association’s members not to expect a robust recovery in demand for softwood lumber before 2011.