WASHINGTON D.C.: In a trend that is likely to continue into 2023, home builders have slowed construction of new single-family homes this year.

In January, the annual construction rate of single-family homes was at a seasonally adjusted 1.16 million properties, while the average rate on a 30-year mortgage was below 4 percent.

However, as long-term mortgage rates climbed above 7 percent for the first time in two decades, the home construction rate slowed to a seasonally adjusted annual of 855,000 by October, meaning that new single-family housing began to fall for the first time in 11 years, with another decline likely in 2023.

Carl Reichardt, a homebuilding analyst at BTIG, said that this year the rate of new single-family housing construction will drop about 11 percent and double that in 2023, before rising by 5 percent in 2024, as reported by Reuters.

"We expect 2023 to be a challenging year for US homebuilders, as persistent affordability issues will lead to housing demand continuing to weaken," said Robert Rulla, senior director at Fitch Ratings, as quoted by Reuters.

Since 2012, single-family home construction rose steadily, before surging during the first two years of the COVID-19 pandemic when ultra-low mortgage rates increased demand.

Robert Dietz, chief economist at the National Association of Home Builders, added "Now we are getting a correction," saying he expects homebuilding to recover in 2024, and mortgage rates to ease from current levels to a range between 4.5 and 6 percent by 2025, according to Reuters.

Meanwhile, Freddie Mac reports that the average rate on a 30-year mortgage fell for the fourth consecutive week this week to 6.33 percent, compared with 3.1 percent last year.