U.S. housing starts dropped more than forecast in December as slowing sales caused builders to pull back at the end of the industry’s second-best year ever.
Builders broke ground on 1.933 million new homes at an annual rate last month, a decline of 8.9 percent from November’s 2.121 million pace and the fewest since March, the Commerce Department said in Washington. Last year, 2.065 million homes were started, second only to the record 2.356 million in 1972.
“Things will cool off and cool off considerably,” said Kevin Logan, senior market economist at Dresdner Kleinwort Wasserstein in New York, before the report. “Price appreciation has created a situation where it’s very unlikely that sales will keep increasing. The overall contribution of housing to economic growth will go from being highly positive to slightly negative.”
Construction declined in three of four regions. They declined 24 percent in the Midwest to 295,000; 22 percent in the West to 433,000; and 14 percent in the Northeast to 172,000. They rose 5.2 percent in the South.