As agents and brokers, we always keep track of housing starts and when the numbers drop, we look at the weather or other issues to find cause for the slide.

However, a steep drop in December starts likely isn’t indicative of the state of housing construction across the nation, according to a CNBC report.
Starts fell hardest in the Northeast and South, where temperatures were significantly below normal. They were flat in the West, where weather is not a factor.

Amid the figures, homebuilders remain optimistic and there is an increase in demand from buyers, meaning the December drop in starts is likely an aberration, but builders clearly need to ramp up production more than they already have.

CNBC also reported that the sale of newly constructed homes in November, which measure only the single-family market, spiked more than 17 percent for the month and were up close to 27 percent over 2016. John Burns, CEO of John Burns Real Estate Consulting, said demand is expected to rise with the improving economy.

“The economy is really strong right now. The unemployment rate is so low and people are getting raises, and that’s going to give them the confidence to buy homes, too.”

In a more recent trend, builders also are starting to build more speculative homes – something not done often since the last housing boom, Burns noted.

“The builders are shifting to the lower price points and entry-level, but their entry-level buyer is a more affluent entry-level buyer, somebody who went to college, got married in their 30s, buying in communities that are $800,000 instead of a million.”

December’s construction figures were low, but for the year, they were solid. Starts rose to the highest level since 2007, with much-needed single-family starts leading the charge. The highest in a decade, however, Redfin chief economist Nela Richardson said it still lower than average and far lower than needed.

“The pace of housing starts averaged just 1.2 million for the year, far short of the historical average of 1.5 million starts. Given the three-year drought in inventory and surging homebuyer demand, a pace of 2 to 3 million starts would be reasonable and appropriate. The market is in dire need of starter homes and homes near transit in major job centers.”

Numbers to watch? Yes. Enough to dampen enthusiasm for 2018? Probably not.

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