- In recent months there has been a sharp drop in the construction of new homes in the US, below expectations.
- The number of new homes and building permits fell sharply between April and May.
- Economists like the leader of Pantheon Macro predict that it will continue to decline.
The US housing market is in free-fall: New construction has plummeted much more than analysts projected. This was recently revealed by the Census Bureau of that country (Census Bureau).
For the second consecutive month, new home starts fell below economists’ estimates, and this would be adding to the symptoms of a drastic change in the US housing market, according to data published last Thursday, June 16.
As revealed by Forbes, the number of new homes fell 14.4% between April and May, from 1.8 million to 1.5 million new homes. It should be noted that analysts estimated that housing starts would be around 1.7 million for these dates.
In addition to the above, construction permits also decreased beyond forecasts. According to the Census Bureau report, such permits were down from 1.7 million last month. In this sense, the economists predicted that it would remain around 1.8 million since April.
Economist Ian Shepherdson, head of the firm Pantheon Macro, told Forbes that the unexpected drop in new home construction would be due to the sharp decline in home sales that builders are currently facing.
Likewise, Shepherdson explained that the latter built houses excessively since the beginning of last year, with a view to covering the demand, which has now fallen rapidly. The economist believes that builders must slow down the construction of new homes to avoid big losses, Forbes reported.
The chief economist of Pantheon Macro added that it is currently going through the “early stages of housing renovation”, and pointed out that more abrupt falls in new housing starts will be seen soon, to the extent that interest rates are lower. increased in the US, because they will make home purchases more expensive and further reduce demand.
The real estate sector has not been immune to the fall in stock markets. Likewise, shares of homebuilding companies such as Masco and Owes Corning fell more than 4% after the data was released last Thursday.
