The Commerce Department said Thursday that the monthly decline put U.S. housing starts at a seasonally adjusted annual rate of 1.19 million units. Almost all of the decrease came from builders beginning work on fewer single-family houses, a reversal from the robust gains reported in October and November.
The pullback is taking place even with prospective buyers competing for a dwindling pool of homes for sale, which has caused prices to surge faster than wage growth. The hot housing market is being fueled by a strengthening job market. The unemployment rate is holding steady at a 17 year-low of 4.1 percent, and mortgage rates have hovered at attractive levels in recent weeks.
For all of 2017, housing starts have risen 2.4 percent. Single-family house construction drove the entire annual increase, while the building of apartment complexes plunged last year as more renters appear to be seeking properties to buy. The slight gains in construction have been unable to fully offset the drastic fall over the past year in the number of existing homes put up for sale.
Housing starts in December fell in the Northeast, Midwest, South and West.
Building permits, an indicator of future construction, slipped 0.1 percent in December to 1.3 million.