WASHINGTON (Reuters) – U.S. housing construction plunged unexpectedly in September amid inputs and labor shortages that crippled the housing market and overall economic activity.
The Commerce Department said on Tuesday that the seasonally adjusted annual rate of 1.555 million units last month was down 1.6%. Data for August was revised to 1.580 million units from the previously announced 1.615 million units.
Economists conducted by Reuters had predicted that the opening would rise to 1.620 million units.
Permits for future housing construction fell 7.7% last month to 1.589 million units.
Although the price of timber has dropped in recent months, lower prices have not yet filtered out for builders. Construction materials such as windows and electric breaker boxes are scarce. The supply chain has been hit by an increase in labor market dynamics due to the Covid-19 epidemic, which has pushed up prices in all segments of the economy.
Startups fell from the 1.725 million unit-base level measured in March, which was higher than the 14-1 / 2 year high. There is a huge backlog of houses approved for construction but not yet started.
A survey by the National Association of Home Builders on Monday showed optimism among single-family homebuilders rising further in October, but noted that “builders are delaying completion hours following persistent supply chain disruptions and labor shortages.”
As Americans sought more spacious shelters for home offices and online schools, the home market was boosted by the onset of the corona virus outbreak from cities to the suburbs and other low-density areas. Thanks to the COVID-19 vaccine, that tail wind is blowing as workers return to offices and schools reopen for private learning.
High inflation raises mortgage rates. The 30-year fixed mortgage rate rose to 2.0% last week from an average of 3.05 last week, according to data from mortgage lender Freddie Mack.
Although still low by historical standards, rising borrowing costs may give first-time buyers less home ownership. Housing prices in July recorded double-digit growth year-on-year.
(Lucia Mudigani Report; Editing by Paul Simao)
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