The number of U.S. home starts priced at $1 million or more dropped 41.6% to 1,762 in 2015, according to the National Association of Home Builders citing data from the Census Bureau Survey of Construction.
The number of homes in this price bracket has been largely on the decline since peaking at 5,647 in 2005. Although the category bottomed out at 128 in 2011, it's unclear whether it will return to its pre-recession height.
- Meanwhile, the category's share of the overall market for new home starts has continued to grow. The category accounted for 0.55% of new home starts in 2005 and 1.06% in 2015. It reported the smallest share — 0.06% — in 2011.
The latest figures from the NAHB further underline the end of a market cycle that has seen new home sizes increase following the recession as high-end homebuyers returned to the market in relatively greater proportions, facing fewer credit restrictions. Forecasts suggest that new home sizes will trend lower as homebuilders switch their focus toward more entry-level homes — but so far, the market for new construction hasn't moved much.
Housing starts have held steady over the 1 million mark for most of this year, with single-family starts up 5.4% year over year in September, but new homes alone won't solve the inventory crisis pushing prices up nationwide. Housing inventory was down 7% year-over-year during the third quarter of 2016, according to real estate listing website Trulia, and the homeownership rate continues to sit near a 51-year low at 63.5% during the period.
The sales of previously owned homes should increase slightly in 2017 from a strong 2016 as more first-time buyers enter the market, according to the National Association of Realtors.
Last week, the National Association of Home Builders/First American Leading Markets Index reported that the U.S. housing market was running at 98% of normal economic activity during the third quarter compared with 93% in the same period last year and 97% in the prior quarter.
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