WASHINGTON – The number of homes built in December fell to the lowest level for more than two years, a sign that developers are predicting fewer new homes being sold this year.
The Ministry of Commerce said Tuesday, homes fell 11.2 percent in December from the previous month to a seasonally adjusted annual rate of 1.08 million. This is the slower pace of construction since September 2016.
During the last 12 months, homes have started 10.2 percent. December fell for single family houses and apartment complexes. Builders have withdrawn, as higher prices have led to a fall in housing sales, suggesting that affordable price challenges have led the pool of buyers and tenants to fall.
"Artificially high prices have created affordable constraints, resulting in a situation where builders cannot deliver on scale," said Brad Dillman, chief financial officer of the multifamily developer Cortland. "The result is that today's housing market is underpredicted."
Last month, the Ministry of Commerce reported that the new house turnover in November was 7.7 percent lower than a year ago.
The housing market originally cooled last year as an average, 30-year mortgage rates rose to almost 5 percent. Housing prices have consistently risen faster than wages, and the calculation of dwellings is set at DKK 250,000 or less is tight, which indicates a weak market ahead.
But the average mortgage has fallen since November, and it may help some Americans to become owners in 2019. The pace of rising prices has also slowed while wage growth has accelerated in recent months, which could also increase sales.
"We are looking forward to seeing a few months of weak single-family beginnings before it increases confidence, leading to increased production," says Danielle Hale, financial manager of realtor.com.
Permission to build housing, an indicator of future activity, rose only 0.3 percent in December. Among single-family homes, licenses fell 2.2 percent in December and 5.5 percent from a year ago.
Home start was flat in the northeast in December but fell in the Midwest, South and West.