Housing starts rose 6.3% to a seasonally adjusted annual rate of 1.643 million units last month, the Commerce Department said on Tuesday. Data for May has been revised down to a rate of 1.546 million units from the previously reported 1.572 million units.
Economists polled by Reuters had expected housing starts to rise to 1.590 million units. Despite the increase last month, housing starts remained below the March rate of 1.725 million units, which was the highest level since June 2006.
Permits for future housing construction fell 5.1% to a rate of 1.598 million units in June.
Although lumber futures contracts fell nearly 70% from their peak in early May, softwood lumber prices rose 125.3% year-on-year in June, according to the reports. latest data on producer prices.
âWhile many end users are relieved to see lumber prices approaching historical standards, buyers should still expect high market volatility with the wildfire season raging in the West, the Log prices skyrocket in the BC interior and duties likely to increase on producers later this year, âsaid Dustin Jalbert, senior economist at Fastmarkets.
Demand for housing is driven by low interest rates and a migration from cities in search of spacious housing in suburbs and other low-density areas for home offices and schools during the COVID-pandemic. 19. But that tailwind is gradually fading as vaccinations allow companies to recall workers to downtown offices.
âWe expect a modest rebound in home sales and new home construction in the second half of the year,â said Sam Bullard, senior economist at Wells Fargo in Charlotte, North Carolina.
“Demand is not the issue, although affordability is an issue as home prices have skyrocketed given exceptionally low inventories and will continue to be a headwind for the industry for the foreseeable future.”
The supply of owned housing is near its all-time low, leading to double-digit growth in median house prices.
A survey by the National Association of Home Builders on Monday showed that builders’ confidence of single-family homes fell to an 11-month low in July. The NAHB noted that “builders continue to face high prices for building materials and supply shortages, particularly the price of oriented strand board, which has climbed more than 500% above its January 2020 level “.
Home builders and a group of other stakeholders met with White House officials last Friday, including Commerce Secretary Gina Raimondo and Housing and Urban Development Secretary Marcia Fudge, to discuss strategies for dealing with the short-term supply chain disruptions in the homebuilding industry.