U.S. home building Dips as Material Shortages Worsen
U.S. single family homebuilding tumbled in October while the number of houses authorized for construction but not yet started jumped to a 15-year high, underscoring the disruption to the housing market from an ongoing shortage of materials and labor. Though the report from the Commerce Department showed an increase in permits for future homebuilding, the rise was concentrated in the volatile multi-family housing segment. This will do little to alleviate an acute shortage of houses on the market, which has led to record annual gains in home prices. "Residential housing construction activity continues to flounder," said Christopher Rupkey, chief economist at FWDBONDS in New York. "There are zoning problems, higher land costs, a lack of labor, and inflation has inflated the cost of raw building materials." Single-family housing starts, which account for the largest share of the housing market, dropped 3.9% to a seasonally adjusted annual rate of 1.039 million units last month. The fourth-straight monthly decline pushed starts to the lowest level since August 2020. Homebuilding fell in all four regions, with large decreases in the Northeast, Midwest and West. The densely populated South, where the bulk of homebuilding occurs, reported a 1.8% drop in single-family starts. Homebuilding has essentially been treading water this year as builders battle shortages and higher prices of raw materials. A survey from the National Association of Home Builders showed confidence among single family homebuilders rose for the third straight month in November, but noted that "supply-side challenges, including building material bottlenecks and lot and labor shortages, remain stubbornly persistent." Lumber, which is used for framing, remains expensive and prices for copper, another essential material in homebuilding, are high. In addition, there were about 333,000 job openings in the construction industry as of the end of September. Construction costs jumped a record 12.3% year-on-year in October, according to producer price data published last week. The materials squeeze could ease during winter, a typically slow season for homebuilding in the Northeast and Midwest. Slowing demand for houses because of reduced affordability could also help to lessen the pressure on supply.
Tags : INTERNATIONAL residential homebuilding Inflation Building Materials National Association of Home Builders Construction Costs Material Shortages