The slowdown in home construction at the end of 2016 is laying the groundwork for a rough spring for buyers.
According to Realtor.com, permits for new residences decreased 10.4 percent from October to November. The rate, not seasonally adjusted, was impacted by the cold weather and traditional lull during the holiday season. Permits declined 0.9 percent in November on a year-over-year basis.
“If we don’t have more permits being pulled for new homes, we’re going to start the spring buying season with possibly the lowest inventory of homes for sale that we’ve ever had,” says Realtor.com Chief Economist Jonathan Smoke. “With higher [mortgage] rates there’s a growing sense of urgency by buyers who had previously put off making the decision.”
Builders started construction on 28.4 percent fewer homes in November compared to October, and 7.9 percent fewer homes since November 2015. The share of homes completed in November, however, rose 4.1 percent from October and 24.2 percent from November 2015.