ConDig (17-Aug-18).  Construction of new homes in the US edged back up 0.9% in July after falling the month prior on a rise in groundbreaking for single- and multi-family houses.

Total housing starts rose to a seasonally adjusted annual rate of 1.17 million, according to latest figures from the Commerce Department.

It comes as single-family starts were up 0.9% to 862,000 units, while the multifamily sector—which includes apartment buildings and condos—increased 3% to 306,000.

“Builder confidence remains solid, although it has fallen back somewhat in recent months due to rising construction costs in 2018, including lumber,” said National Association of Home Builders  (NAHB) chairman Randy Noel.

“As builders grapple with higher costs, one positive development is that lumber prices have shown signs of easing the past two months off their record high levels posted in June.”

Construction permits, which are a sign of future construction activity, increased 1.5% to 1.31 million units in July. Single-family permits posted a modest gain of 1.9% to 869,000. Multifamily permits were relatively unchanged, up 1.7% to 410,000.

The association noted that some projects are experiencing construction start delays due to cost concerns, with the number of single-family units authorized but not started up 25% since July 2017.

It comes amid a deepening skills shortage across the construction industry and high material costs.

Leaders of the homebuilding industry continue to warn about the rise in material costs, which has been exacerbated follow a decision by President Trump to slap a 25% tariff on imported steel and a 10% duty on foreign aluminum from Canada, Mexico and the European Union on May 31.

“Supply-side challenges including increases in material prices and chronic labor shortages are affecting affordability in many markets,” said NAHB chief economist Robert Dietz.

“However, consumer demand remains strong due to a growing economy and job market and favorable demographics.”