Home construction improved month over month in December. Housing Starts, which measure new homes breaking ground, rose6.2% from November to an annual pace of 1.404 million. Even so, that’s still 7.3% lower year over year.
Building Permits, which signal future construction activity, increased 4.3% month over month to a 1.448 million annual pace, though they remain slightly below year-ago levels.
Despite the uptick, builders remain cautious. The National Association of Home Builders Housing Market Index dipped one point in February to 36. A reading below 50 means more builders view conditions as poor than good. Builders continue to point to affordability concerns and higher construction costs as challenges, although lower mortgage rates have been a positive development.
What’s the bottom line?
There still aren’t enough homes available to fully meet buyer demand, and increasing supply is a slow process. Even when construction activity improves, it can take months for new homes to move from permits to completion. That imbalance between supply and demand could keep the market competitive in the months ahead.
