As severe winter weather hit parts of the country last month, US home construction plummeted, with new housing starts falling 10.3 percent, the Commerce Department said on Wednesday.

The largest drops were in the Northeast and Midwest, where the weather was the worst, but the South also saw a decline even as growth continued in the West, as construction firms scrambled to meet the demands of a hot housing market.

A massive artic blast last month knocked power out to much of the state of Texas, bringing activity in many industries to a standstill.

Home construction projects started nationwide fell to an annual rate of 1.42 million, seasonally adjusted, from their upwardly revised January level, and the volatile housing permits also fell 10.8 percent, both results worse than analysts had forecast.

The setback will not be permanent, said Ian Shepherdson of Pantheon Macroeconomics, but he warned that home construction is set to moderate later in the year.

The US real estate market boomed last year as the Covid-19 pandemic pushed consumers to reassess their living situations.

Bad weather caused both new housing starts and permits to decline in the United States, but the overall market could be set for moderation in the coming months
Bad weather caused both new housing starts and permits to decline in the United States, but the overall market could be set for moderation in the coming months AFP / Chris DELMAS

"Starts will rebound strongly in March, but the bigger picture here is that the declining trend in mortgage applications in recent months means that new cycle highs aren't likely to be sustained in the near-term," he said in an analysis.

Recent months have seen home prices rise as buyers competed for scarce inventory and builders scramble to keep up. February's rate of new starts was 9.3 percent lower than the year prior.

New homebuilding dropped 39.5 percent in the Northeast, and 34.9 percent in the Midwest, regions which saw the worst winter weather.

Starts in the South -- which accounts for about half of the construction in the country -- dropped 9.7 percent, while the West saw construction increase 17.6 percent.

Rubeela Farooqi of High Frequency Economics agreed the housing market was set to moderate in the coming months, but predicted homebuilding would remain strong.

"Housing demand remains positive, mortgage rates are historically low and combined with record low inventories are likely to support to building activity, especially in the single-family sector," she said.