Residential Construction down -11% Good? Bad?

Real Estate

New Residential Construction show a decline of -11.2% for December.  Ok? SO? You need to ask yourself is this GOOD or BAD for the housing market?  I would spin this as a GOOD thing. Here is a 2 sentence explanation! Over the last 5 or 6 years, we have had a HUGE drop off in New Home Construction, losing millions of units of new houses that have never been built because lenders have been more conservative lending money to builders to build new houses, negative.  BUT - This means a lower SUPPLY of homes on the market to sell, (remember supply and demand from your Economics 101?), a lower supply means the prices will go up with a given demand, this will lead to a more stable and not overbuilt market, VERY POSITIVE!   Currently, we are seeing home sales in most of America stay steady.  When you factor out the OVERHEATED markets like Dallas, Denver, San Fran, Austin, Seattle, and New York, the rest of the country is steady, on a nice growth trajectory, 2%, 3%, 4% very sustainable long term.  Double-digit price increases in the OVERHEATED  housing market are sexy and sound GREAT but they are totally unsustainable in the long term and ALWAYS lead to the market CRASHING!!  So I would say this is good news!

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New Residential Construction
U.S. Census Bureau
8:38 AM (5 hours ago)
New Residential Construction for U.S. Census Bureau.
New Residential Construction
02/26/2019 08:30 AM EST

Privately-owned housing starts in December 2018 were at a seasonally adjusted annual rate of 1,078,000.
This is 11.2 percent (+/- 14.0%)* below the revised November 2018 estimate of 1,214,000.

December 2018: -11.2* % change
November 2018 (r): +0.4* % change