US home construction up a moderate 3.6% in May | Business News
A man works on the roof of a new home in the Homestead housing development in February in Owasso.
A carpenter aligns a beam for a wall frame at a new house site in Madison County, Miss., Tuesday, March 16, 2021. U.S. home construction fell by a bigger-than-expected amount in April but the drop came after housing had risen to the highest level in 15 years. The Commerce Department said Tuesday, May 18, that construction dropped 9.5% in April to a seasonally adjusted annual rate of 1.57 million units. % in April to an annual rate of 1.76 million units, a good sign that the April dip in construction will be temporary.
WASHINGTON — U.S. home construction rose 3.6% in May as builders battled a surge in lumber prices that have made homes more expensive
The May increase left construction at a seasonally adjusted annual rate of 1.57 million units, the Commerce Department reported Wednesday.
Applications for building permits, looked to for indications of activity ahead, fell 3% in May to a seasonally adjusted annual rate of 1.68 million units.
Housing has been one of the standout performers during the pandemic-triggered recession.
But many economists believe that the surge in home building and sales over the past year may begin to slow, especially for single-family homes.
“We expect starts to mostly move sideways over the balance of 2021,” said Nancy Vanden Houten, lead economist for Oxford Economics. “Strong demand, a need for inventory and homebuilder optimism will keep a floor under activity, but builders continue to face supply constraints that may hamper or at least postpone construction.”
Builders are getting one break. Lumber prices, which surged to record levels this year, have started to come down, suggesting that a speculative bubble that had developed in lumber prices is beginning to deflate.
Rising material prices and supply chain shortages were blamed for a drop in builder confidence this month. The National Association of Home Builders/Wells Fargo survey reported this week that builder confidence had declined two points to 81 in June, still a high level.
