Housing construction slid again in November as inflationary pressure and high rates kept demand down.
Residential starts fell 0.5% from October to an annualized rate of 1.43 million, down 16.4% from the same time last year, according to data from the U.S. Census Bureau.
This is the third consecutive decline for these data.
Economists surveyed by the Wall Street Journal predicted starts would fall to 1.4 million from October’s initial estimate of 1.43 million.
Single-family starts dropped 4.1% month-over-month to an annualized rate of 828,000. This is their lowest level since May 2020.
Permits for new homes fell 11.2% to a rate of 1.34 million. Single-family permits tanked by 7.1% to their slowest pace since 2020.
Permits offer an indication of how many homes will be built in the coming months. The data suggest an even tougher market on the horizon.
Builder confidence declined every month this year as potential buyers found they could no longer afford a new home. When rate buydowns and price cuts didn’t help draw them in, builders began offering “sweetheart” deals to institutional investors in the hopes of moving stagnant properties.
But there is hope that the market will swing back. Mortgage rates have fallen back under 7% and keep dropping. For the first time since April, builders expect their future sales to increase.