ConDig (20-Jul-21). Construction of new homes in the US increased 6.3% in June as demand for houses remains underpinned by low mortgage rates, while permits for future home construction dropped to an eight-month low due to elevated building material costs.
Overall housing starts rose to a seasonally adjusted annual rate of 1.64 million units, according to a report from the U.S. Census Bureau.
Within this overall number, single-family starts rose 6.3% to a 1.16 million seasonally adjusted annual rate. The multifamily sector, which includes apartment buildings and condos, increased 6.2% to a 483,000 pace.
Overall permits, which are a sign of future construction activity, fell 5.1% to a 1.60 million unit annualized rate in June. Single-family permits dipped 6.3% to a 1.06 million unit rate. Multifamily permits decreased 2.6% to a 535,000 pace.
“The recent weakening of single-family and multifamily permits is due to higher material costs, which have pushed new home prices higher since the end of last year,” said National Association of Home Builders (NAHB) chief economist Robert Dietz.
“This is a troubling sign for future housing production. This is a challenge for a housing market that needs additional inventory.”
Despite the recent downward price trend for lumber, builders continue to face high building material costs as well as shortages of labor and land.
The count of single-family homes currently under construction is 675,000—up 32% compared to a year ago. The number of multifamily units under construction is up 2% to 684,000 apartments.