The number of homes being built in the United States dropped last December despite a massive surge in the previous month.
According to a report from the US Census Bureau released on Thursday, January 18th, the number of new home construction initiatives fell by 4.3% as 2023 drew to a close. This resulted in the annual rate being adjusted to around 1.46 units, significantly lower than the 1.56 million seen in November 2023.
However, RCLCO Real Estate Consulting principal Kelly Mangold, the construction and real estate sector remain unfazed by this drop in house building, especially given the ongoing housing shortage as well as the way mortgage rates have fallen over the past several months. Mangold particularly feels that this drop in mortgage rates will drive construction further within the year.
Indeed, recent Freddie Mac reports show that the average mortgage rate in the US now stands at 6.6%, a full percentage point lower than the 7.79% which was as high as it went in the past year. Experts feel that it will continue to drop as the year progresses.
Time to Build
At the start of the year, homebuilder sentiment remains strong and optimistic, especially as the market for new construction has been at its highest for much of the past quarter.
The number of those opting to build rather than buy has grown thanks to the still-low inventory of homes for resale. Higher rates are to blame for this, as many homeowners refuse to sell and give up their currently low mortgages for the higher current rates.
Mangold, however, believes that a significant decrease in mortgage rates could be the shot in the arm that the resale market needs. If this occurs, then the number of homes up for sale could increase.
