Housing starts fell 7 percent last month to a seasonally adjusted annual rate of 1.534 million units, according to a report from the Commerce Department.
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This story originally appeared in The Epoch Times
Housing construction fell sharply in July, suggesting that increased construction costs and rising house prices continue to be headwinds for the housing market.
According to a report by the Ministry of Commerce (pdf), housing starts fell 7 percent last month to a seasonally adjusted annual rate of 1.534 million units. While this is the slowest pace since April, it was 2.5 percent above the July 2020 figure.
Building permits – an early indicator of future construction – rose by 2.6 percent in July, reversing a trend that had been falling for three months. However, the growth was limited to the multi-family house segment, with building permits for single-family houses falling by 1.7 percent over the course of the month, which indicates a slight relief from the housing shortage, which is driving up prices and increasingly sidelining prospective buyers.
Building owners are affected by rising material and skilled labor costs, which, together with a scarce housing stock, have driven up property prices. The average price of an existing single-family home in the United States rose 22.9% year over year in the second quarter of 2021 to hit an all-time high of $ 357,900, the National Association of Realtors said in an August 12 report.
Rising property prices have increasingly sidelined potential buyers. A recent report from the National Association of Home Builders (NAHB) shows that the top reason people actively looking to buy a home say they don't make a purchase because they are unable to find a home. Price range. Two-thirds of active buyers in the second quarter of 2021 spent three months or more looking for a home but were left empty-handed.
The Department of Commerce's New Housing Report also showed that the number of homes approved for construction but not yet started rose 2.6 percent a month in July to the third-highest ever, confirming the view that builders are still reluctant to start new projects .
"While demographics and interest in home buying remain solid, higher costs and material access problems have resulted in lower housing construction and even hampered some new home sales," NAHB chief economist Robert Dietz said in a statement.
The Department of Commerce's August 18 report followed an August 17 survey by the National Association of Home Builders that showed home builders' confidence plummeted to a 13-month low in August due to higher material costs and property prices, which affected demand cools down.
"Buyer traffic has dropped to its lowest level since July 2020 as some potential buyers experience sticker shock due to higher construction costs," NAHB chairman Chuck Fowke said in a statement.
While the cost of wood has fallen from its all-time high of $ 1,711 per thousand board feet in May, the cost of materials remains an issue exacerbated by the lack of land and labor.
While the Department of Commerce report showed that single-family home completion rose 3.6 percent to 954,000 units in July, realtors estimate that single-family home construction start and completion rates in the range of 1.5 million to 1.6 million units each Months have to be in order to close the stock gap.
Reuters contributed to this report.
By Tom Ozimek
Tom Ozimek has a broad background in journalism, deposit insurance, marketing and communications, and adult education. The best writing advice he has ever heard comes from Roy Peter Clark: & # 39; Hit your target & # 39; and & # 39; leave the best for last. & # 39;