New Home Construction Down

Posted by Steph Kaye on Friday, February 20th, 2015 at 11:35pm.

Month Over Month

The data released on Wednesday of this week on new home construction show a mixed bag: Groundbreakings are slightly down month over month, but compared to this time last year, they’re way up—signifying a recovery in the housing market.

That must be good news in the long run, right? Maybe not. Jonathan Smoke, the chief economist for, says the data shows a “glass-half-full picture.” That’s because the 2% month-over-month drop reflected in single-family units—which make up most of the market—won’t help the already tight supply of homes available.

“If supply is a problem—and it is—this level of growth is not going to alleviate the pressures building from increased demand,” Smoke said.

“At this level of activity, new home construction remains 40% below a more typical level for a strong, expanding economy,” he added. “The housing market simply won’t be able to support a surge in household formation and interest in buying that should follow the stronger economic context. If we don’t see growth in new construction and listings this spring, we’re likely to see more price appreciation ahead than the more moderate gains initially expected for 2015.”

U.S. housing starts—the groundbreaking on new homes—fell in January to a seasonally adjusted annual rate of 1.065 million, the Commerce Department reported on Wednesday. That’s offset by months of good news, though. Starts have been above the 1 million mark for five straight months. And compared to January of last year, groundbreaking on new homes was up nearly 19%. Plus, January’s figure was most likely affected by rough weather conditions across the country.

Economists believe the housing market is poised to pick up if the labor market continues to improve. But significant challenges still remain, such as supply, tight credit conditions, and lack of savings by consumers. “Most of the negative factors limiting growth in the housing market have gone away, and key indicators point to increasing demand ahead,” Smoke said. “Supply should follow as prices make it worthwhile for existing homeowners and builders alike to put homes on the market, but we’re just not seeing that supply materialize yet.” 

If you are in the market for a new house and would like information on homes for sale, or are first time home buyer not working with a Realtor and would like to schedule a consultation with a qualified Oakland County and Macomb County Realtor, please complete the Lang Premier Properties contact form to have a real estate agent contact you. 

Lang Premier Properties are Birmingham Realtors specializing in Oakland County Real Estate. Stephanie is an agent with Lang Premier Properties. See what past clients have to say about Stephanie Lang.  Lang Premier Properties looks out for your best interests when you purchase a new custom luxury home. We always recommend working with an experienced luxury real estate agent when buying a new luxury estate.

2 Responses to "New Home Construction Down"

Great Home for Sale in Rochester wrote: [...] Wall Street Leaving Single Family Home Market
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Posted on Sunday, February 22nd, 2015 at 2:21pm.

Patience in 2015 wrote: [...] Wall Street Leaving Single Family Home Market
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Posted on Monday, February 23rd, 2015 at 8:06pm.

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