Supply Surpasses Demand in US Housing Market
The number of unsold newly built homes in the US hit a record high last month, as high property prices caused demand to slip.
The US Commerce Department reported that the number of new single-family homes sold in January dropped 5% to a seasonably adjusted annual rate of 1.233 million sales. The total number of unsold homes, meanwhile climbed to a record high of 528,000.
Analysts read these numbers as the start of a definite slowing down of America’s red hot housing market, which has been steadily growing for the past five years.
“The decline in new home sales in January makes it clear that there is some real softening in the housing market,” said chief economist, Joel Naroff, of Naroff Economic Advisors.
Warm weather in January caused a 14.5% growth in the number of houses constructed, but had little or no effect on sales, bringing supply ahead of demand in most parts of the country.
It is likely that the construction industry will settle down in the months to come, in order to prevent the number of new homes being built from surpassing consumer demand for new houses.