Building of US homes near 11-year peak, but permits fall

WASHINGTON • US homebuilding surged to a near 11-year high last month amid an acceleration in both single-and multi-family home construction.

However, a second straight monthly drop in permits suggested housing market activity will remain moderate.

Housing starts jumped 5 per cent to a seasonally adjusted annual rate of 1.35 million units last month, the Commerce Department said yesterday.

That was the highest level since July 2007.

Data for April was revised slightly to show starts falling to a rate of 1.286 million units, instead of the previously reported pace of 1.287 million units.

Building permits fell 4.6 per cent to a rate of 1.301 million units, the lowest level since last September.

Economists polled by Reuters had forecast housing starts rising to a pace of 1.31 million units last month and permits declining to a rate of 1.35 million units.

Single-family homebuilding, which accounts for the largest share of the housing market, increased 3.9 per cent to a rate of 936,000 units last month.

Single-family home construction rose in the north-east and Midwest, but fell in the south and west. Single-family homebuilding has lost momentum since hitting a pace of 948,000 units last November, which was the strongest in over 10 years.

Permits to build single-family homes fell 2.2 per cent last month to a pace of 844,000 units, also the lowest level since last September.

With permits lagging starts, single-family homebuilding could slow in the months ahead.

A survey on Monday showed confidence among single-family homebuilders dipped this month, with builders "increasingly concerned that tariffs placed on Canadian lumber and other imported products are hurting housing affordability".

According to the survey, the expensive lumber had "added nearly US$9,000 (S$12,200) to the price of a new single-family home since January 2017".

The Donald Trump administration in April last year imposed anti-subsidy duties on imports of Canadian softwood lumber.

More expensive lumber, together with a lack of land and labour, have worsened an acute shortage of homes for sale, hobbling the housing market.

REUTERS

A version of this article appeared in the print edition of The Straits Times on June 20, 2018, with the headline 'Building of US homes near 11-year peak, but permits fall'. Print Edition | Subscribe