Builders Are Optimistic Despite Drop in Housing Starts at the End of 2017

Economists forecasted housing starts totaling 1.28 million in December 2017, falling 8.2 percent to a 1.19 million annual rate. Home construction fell in all four regions of the U.S., led by a 14.2 percent drop in the South.

Despite this new data, permits, housing starts and the number of new homes completed in 2017 all hit the highest levels since 2007. Further, home builders are optimistic -- a sentiment tracker from the home builder industry association surged to an 18-year high in 2017. Ian Shepherdson, chief economist for Pantheon Macroeconomics, told MarketWatch that, “With the trend in mortgage demand quite firm, we expect to see stronger housing market activity and construction over the next few months, but further weather-distorted numbers are likely over the next few weeks."

The South, the biggest home-building region in the U.S., had seen a burst of new construction following a pair of major hurricanes at the end of the summer and some dropoff might have been expected. Severe winter weather may have also dampened construction more than usual in December.The slowdown is unlikely to last, though. Permits have topped 1.3 million for three straight months, pointing to faster home building in the spring.

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