Housing Starts, which measure the start of construction on homes, fell 1.4% from November to December. Starts for single-family homes, which are the most important because they are in such high demand among buyers, were up 11.3% monthly but they are still 25% lower when compared to December 2021. Building Permits for single-family homes, which are indicative of future supply, also fell 6.5% for the month and 34.7% year over year.

What’s the bottom line? While construction has slowed, December’s data was better than expected. In addition, the low supply environment in new homes (and in existing homes as noted above) will continue to be supportive of prices. This is very different from the housing bubble, where demand was waning but the supply of new homes was significantly increasing.