Washington DC: The Commerce Department reported that US home construction plunged more than expected in April. This is primarily in the single-family home market segment, probably due to soaring timber and other building materials.
The number of homes allowed to build but not yet under construction has risen to the highest level since 1999, suggesting hesitation on the part of builders.
“Constructors are delaying the start of new construction because of the significant increase in the cost of timber and other inputs,” said Mike Fratantoni, chief economist at the Washington Mortgage Bankers Association. “These supply chain constraints are restraining the housing market, which would otherwise be accelerating given the strong buying demand supported by improved job markets and low mortgage rates.” Said.
Housing starts fell 9.5% last month to a seasonally adjusted annual rate of 1,569,000 homes.
The start surged 67.3 percent year-on-year in April. However, breakthrough activity declined in the Midwest and the densely populated South, but increased in the Northeast and West.
Demand for larger and more expensive homes surged, but as more Americans were forced to work and study from homes, the virus disrupted the labor supply at sawmills and harbors. The result was a shortage of wood and other raw materials, rising prices and keeping first-time homebuyers out of the market.
Meanwhile, tariffs on steel imports have also been added to construction costs. According to the latest producer price data, timber prices in April surged 89.7% year-on-year.
However, future housing permits increased 0.3% in April to 1.76 billion units, a sharp rise of 60.9% compared to April 2020, and are being implemented prior to the start, and the number of futures. It suggests that housing construction will recover in months.
Single-family homes, which hold the largest share of the housing market, fell 13.4% to 1,087,000 units in April. This indicates that builders may be holding back due to a shortage of more expensive materials and labor.
In addition, the building permit for single-family homes decreased by 3.8% to 1,149,000 units. The number of residential units allowed to build but not started surged 5.0% at the end of April to reach 232,000, the highest since the government began tracking the series in January 1999.
“Currently, it’s a bit uncertain when we can accurately solve supply problems,” said Isfer Munir, an economist at Citigroup in New York. “But in the end, we anticipate that the demand backlog may continue to support housing activities until the end of the year.”
The housing market was a star performer in the economic recovery from the COVID-19 recession. Most economists expect housing to have a neutral impact on GDP growth in the second quarter.
Soaring timber prices slow US home construction
Source link Soaring timber prices slow US home construction