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In this Thursday, February 21, 2019, a photo of a newly built house, located in Natick, Massachusetts, is reflected in the water. On Tuesday, February 26, the Commerce Department reported on the construction of homes in the United States in December. (AP Photo / Steven Senne)
WASHINGTON – The number of homes built in December dropped to the lowest level in more than two years, which could indicate that developers expect fewer new homes to be sold this year.
The Commerce Department said on Tuesday that housing starts fell 11.2% in December from the previous month to $ 1.08 million a year. This is the slowest pace of construction since September 2016.
In the last 12 months, housing starts dropped by 10.2%. The decline in December occurred in single-family homes and apartment buildings. Builders retreated as rising prices led to a drop in home sales, suggesting that affordability issues have led to a decline in the pool of buyers and potential renters.
"Artificially high prices have created affordability constraints, resulting in a situation in which builders can not provide a large-scale supply," said Brad Dillman, chief economist for multi-family developer Cortland. "The result is that the current real estate market is under-supplied."
The Commerce Department announced last month that new home sales in November were 7.7% lower than a year ago.
The housing market first cooled last year, with average 30 – year mortgage rates rising to almost 5%. House prices have risen steadily faster than wages, and the stock of houses priced at $ 250,000 or less is tight, suggesting a weak market.
But the average mortgage has dropped since November, which could help some Americans become homeowners in 2019. In addition, the pace of price hikes has slowed and wage growth has accelerated in recent months , which could also boost sales.
"In the future, we could witness a few more months of weak single-family home starts before increased confidence leads to increased production," said Danielle Hale, chief economist at realtor. com.
Home building permits, indicators of future activity, increased only 0.3% in December. Among single-family homes, permits fell 2.2% in December and 5.5% from the previous year.
Housing starts remained stable in the northeast in December but declined in the Midwest, the South and the West.
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