Bright news concerning American home building: activity increased more than expected in June, though expensive lumber, as well as shortages of labor and land, continued to constrain builders’ ability to fully take advantage of robust demand for housing.
Data released Tuesday by the U.S. Commerce Department revealed housing starts rose 6.3% to a seasonally adjusted annual rate of 1.643 million units last month. Data for May was revised down to a rate of 1.546 million units from the previously reported 1.572 million units.
Economists had forecast starts rising to a rate of 1.590 million units. Despite last month’s increase, starts remained below March’s rate of 1.725 million units, which was the highest level since June 2006.
Though lumber futures have dropped nearly 70% from a record high in early May, softwood lumber prices increased 125.3% year-on-year in June, according to the latest producer price data.
Demand for housing is being driven by low interest rates and a migration from cities in search of spacious accommodations in the suburbs and other low-density areas for home offices and schooling during the COVID-19 pandemic. But that tailwind is gradually fading as vaccinations allow companies to recall workers back to offices in city centers.
