U.S. building permits picked up in February, beating expectations and signaling strong future growth.

After a slow start to 2014, building permits in February rose to a seasonally-adjusted annual rate of 1,018,000, the Commerce Department said Tuesday.
That’s a 7.7% increase from January; the highest percentage gain since April 2013.

Home construction, however, was flat compared to last month.

Cold weather and the availability of land, credit and labor slowed home starts during the month. But the rise in building permits suggests that construction will improve when the weather does.

“The demand is still there,” said Russell Price, a senior economist at Ameriprise Financial. “Building activity is continuing to slowly ramp up. The builders just weren’t able to get started on all that many during the month.”

Permits for multi-unit housing saw the biggest improvement. Housing with five units or more rose 27% in February. Permits for single-family units, on the other hand, fell about 2%.

This is partly because more young people are forming new households; raising the number of renters and increasing the demand for apartments.

“That’s a trend toward more apartment dwelling on the part of young people,” said Peter Morici, a business professor at the University of Maryland. “They want the flexibility of being able to move easily, because of the kind of job market we have.”

In the West, permits for multi-unit housing largely contributed to the region’s 18% rise in building permits during the month.

The West also had the highest builder confidence in March, according to the National Association of Home Builders and Wells Fargo.

The housing market in the region stayed strong over the winter because of consistently moderate weather. Real estate professionals expect to see similar growth nationwide once weather improves in the spring and summer months.

“All the signs are there,” said Armando Montelongo, a real estate investor. “The real estate economy picks up in California first and then spreads across the country. In California you continue to see that there is buying.”

Despite moderate weather and consistent demand, home starts actually fell in the West during February, especially for single-family homes. Economists are puzzled, but they fault market volatility for the numbers.

“It is a little bit of a head scratcher,” said economist Price. “But sometimes it bounces around from month-to-month. I’ll wait to see how the trend plays out in the West.”

In San Diego, the setback in home construction hasn’t hurt the demand for homes, which peaked last summer and caused prices to rise.

“Nothing has decreased, it’s just stabilized.” said Melissa Tucci, a San Diego-based realtor at Century 21, who welcomed the slowdown in the market. ”You don’t want a big bubble.”

Economists are also optimistic about where building activity is headed in 2014. Slow, consistent growth is the goal.

“Sustainability is what you want,” said professor Peter Morici. “I think we’ve all had enough of the roller coaster.”