December 4, 2022

U.S. housing construction stumbles amid unstoppable barriers

Seattle, Washington, USA A sign for a “sale” outside a residential home in the vicinity of Queen Anne. May 14, 2021

  • Housing starts to fall 7.0% in July
  • Single family starts at 4.5%; Multiple Family Dive 13.1%
  • Building permits rise 2.6%; Single Family Fall 1.7%

WASHINGTON, Aug. 18 – US housing construction fell more than expected in July, with recent quarter construction costs and housing prices continuing to dominate the housing market at the start of the third quarter.

Although the Commerce Department’s report on Wednesday showed a resilience in building permits after three consecutive monthly declines, gains were in the volatile multi-family housing segment, which could ease the severe housing shortfall that has pushed up prices.

The number of homes approved for construction but not launched last month was the third-highest on record, indicating builders’ reluctance to undertake new projects.

“There is no doubt that home building is hitting a certain period of time, and rising housing prices are leading to a record fall in consumer prices, which now feels like a good time to buy a home,” said Whitner, a senior economist at Wells Barco in Charlotte, North Carolina.

Housing start-ups were down 7.0%, adjusted last year to 1.534 million units annually. Data for June was revised from the previously reported 1.643 million units to 1.650 million units. Economists conducted by Reuters had predicted that startups would fall at a rate of 1.600 million units.

Housing structure in the Northeast, Midwest and West declined, but in the south with population increased. On an annualized basis, it increased by 2.5% in July. Single-family startups, which account for the largest share of the housing market, fell 4.5% to 1.111 million units. Multi-family segment start-ups fell 13.1% to 423,000 units.

Permits for future housing construction rose 2.6% to 1.635 million units in July. Single-family permits fell 1.7% to 1.048 million units. They are in a backward start, which suggests a moderate restoration in single-family home construction.

Permits for multi-family housing projects rose 11.2% to 587,000 units, reflecting a resurgence in demand for rental accommodation as the economy fully reopens.

The report follows a survey by the National Association of Homebuilders on Tuesday, which found that confidence among single-family homebuilders fell to a 13-month low in August due to higher material costs and housing prices. read more

Shares on Wall Street were mixed in volatile trading. The dollar is stable against the basket of coins. The U.S. Treasury price is low.

High house prices

Although logging has fallen from a record $ 1,711 per thousand board-feet in May in the future, building costs remain an issue. Land and labor shortages persist.

In March it struggled to build a house out of the race at a rate of 1.725 million units, the highest level since June 2006.

Housing demand increased during the COVID-19 epidemics, which migrated from cities to the suburbs and other low-density areas. Strong demand, driven by record low mortgage rates, outweighs supply.

Inventories of previously owned homes are at an all-time low, leading to double-digit growth in home prices.

But the epidemic is gradually disappearing as vaccines allow companies to call workers back to offices in city centers and schools are reopening for personal learning for the new school year.

Potential home buyers are also getting discounts on higher home prices. A report by the Mortgage Bankers Association on Wednesday showed a drop in home loan applications last week.

Resident investment shrank in the second quarter after three quarters of double-digit growth. Moderate recovery is expected in the third quarter.

Last month, building permits fell in the Northeast and South. They rose in the West and Midwest.

The outstanding number of unoccupied homes rose 2.6% to 241,000 units, the third-highest reading in the series’ history, helping to support housing.

“Some of these permitted units that have not been started will be canceled, but supply chain bottles will be settled as home builders work on the construction, and most will start when the prices of critical inputs such as wood come in,” said Ryan Sweet, senior economist at Moody’s Analytics in West Chester, Pennsylvania.

Housing completion last month rose 5.6% to 1.391 million units. Single-family home completion increased 3.6% to 954,000 units. The epidemic has extended the completion time since permission was granted for the construction of a single-family home, which economists blamed on supply restrictions.

Realtors estimate that single-family home start-up and completion rates should be in the range of 1.5 million to 1.6 million units per month to close the inventory gap.

Housing under construction rose 0.4% last month to 1.373 million units last month.

“Solid housing demand and low inventory will encourage home builders and support the start-up of housing, but higher input and labor costs will reduce performance,” said Oren Klchkin, a leading U.S. economist at the Oxford Economy in New York. “We expect housing to begin a moderate relocation in the third quarter on the back of a 2% decline last quarter.”

Report by Lucia Mudigani; Editing by Paul Simao and Andrea Richie

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