November housing starts fell 0.5% from October and were down 16.4% year-over-year as rising mortgage rates made new-home purchases increasingly unaffordable for prospective buyers. Interest rates surged to a 20-year high in October before gradually retreating in November, but cost-conscious buyers aren’t budging.
Much like new housing starts, building permits also suffered a tough blow in November, dropping 11.2% from the revised October rate and posting an annual decline of 22.4%, CNN reports. Though NAHB predicts that weaker housing conditions will persist in 2023, a market correction could lead to major price reductions and a subsequent boost in buyer demand.
“The home building market weakened further in November and it’s tough to forecast the bottom given relatively high mortgage rates,” said Robert Frick, corporate economist at Navy Federal Credit Union.
“Potential homebuyers should see some relief next year in the form of lower mortgage rates and possibly lower home prices,” said Frick.
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