Housing starts across the US exceeded expectations in June, suggesting that construction in the residential sector may be unfazed by ongoing supply chain bottlenecks and shortages of skilled labour.
According to latest data published by the US Census Bureau, housing starts jumped 6.3% in June to an annualized rate of 1.64 million, marking the highest rate in three months, and modestly above the 1.59 million pace forecast by a Bloomberg survey. Compared to year-ago levels, housing starts are 29.1% higher.
On the other hand, building permits, which provide an insight into future construction, fell 5.1% to a seasonally adjusted annual rate of 1.59 million last month, but still remained 23.3% above June 2020 levels. Elevated construction material costs, coupled with land and labour shortages, have kept developers from boosting housing construction. Indeed, according to the National Association of Home Builders, homebuilder confidence slumped to an 11-month low, data released Monday shows.
Although lumber futures have come down more than 50% from the historical highs noted in May, the price of softwood lumber still remains 125.3% higher from June 2020. “While many end-users are relieved to see lumber prices cratering closer to historical norms, buyers should still expect elevated volatility in the market with wildfire season raging out West, log prices soaring in the British Columbia Interior and duties potentially set to increase on Canadian producers later this year,” explained Fastmarkets senior economist Dustin Jalbert to CNBC.
Similarly, housing completions across the US stood at a seasonally adjusted rate of 1.32 million, which is a 1.4% decline from May, but still 6.5% higher compared to June 2020 levels.
Information for this briefing was found via the US Census Bureau, Bloomberg, and CNBC. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.