New home under construction.
The Department of Commerce said Wednesday that seasonally adjusted new housing starts in December came in at 529,000. That is compared to 553,000 starts a month earlier and was worse that the 550,000 predicted by economists.
Building permit applications came in at 635,000 in December 2010, a big increase from the revised figure of 544,000 for November. Analysts stated one reason for the higher surge was the end of quarter or end of year deadlines for submitting homebuilding permits.
“As we emerge from the traditionally slow holiday season, builders continue to look for signs of improvement in the economy, home buyer demand and builder and consumer credit conditions,” said Bob Nielsen, a homebuilder from Reno, Nev. and the 2011 chair of the National Association of Home Builders. “Unfortunately, a severe lack of construction financing, and widespread difficulties in obtaining accurate appraisal values, continue to limit builders’ ability to prepare for anticipated improvements in buyer demand in 2011.”
David Crowe, chief economist for NAHB, said consumers and homebuilders are still looking for clear signs that the economy is improving.
“Meanwhile, the problems that builders continue to confront in obtaining production financing, and in maintaining performing lines of credit, threaten to significantly slow the onset of a housing recovery,” Crowe said.
Homebuilders saw their stock fall slightly in light of the news. Toll Brothers was down 0.7 percent ahead of the opening bell and KB Home fell 0.4 percent early Wednesday. KB Home posted a quarterly profit recently that came as a surprise, and the company said that a few number of new homes was offset by higher average selling prices.