While some believe this to be the end of the five-year housing boom, let me remind readers that pundits said that last year, only to be wrong when scarce inventory and record buyer demand pushed prices and sales higher earlier this year. Here’s a snippet from the St. Petersburg Times article speculating on a slower market and reporting higher new construction starts for November:
New home construction unexpectedly increased in November at the fastest pace in seven months in what could be a final flourish for the nation’s 5-year-old housing boom. The Commerce Department reported construction activity rose by 5.3 percent in November from the October pace, when housing construction had fallen by 6.6 percent.
New home construction starts are higher due to increased demand. While builders were skiddish in October, it’s clear that they were more optimistic in November. My feeling is that lower gasoline prices had a lot to do with changed builder outlook. This was not noted in articles noting higher new construction starts, but it has great influence on homebuyer outlook, as do other things, such as mortgage interest rates, which are still at record lows, even with recent rate increases by the Fed.