With surges of wood coming from the Midwest and Northeast, homebuilders in the Unites States (U.S.) saw construction of housing starts rise 8.3 per cent in June, according to the Commerce Department. Although home construction has gone up by 3.9 per cent year-to-date, the increase could not make up for the shortfall in existing homes being sold, and the purchase prices for homes have shot up by more than six times wage growth as the demand for homes has far outstripped the supply.
While the housing figures are showing demand that is growing at a healthy rate, new construction is unable to keep up with it. Consequently, according to the Aurora Sentinel, while more Americans are purchasing homes, they are also struggling due to higher costs and a lack of supplies.
Additionally, home builders are also challenged with higher costs for land and material that includes lumber, restricting the amount of construction that can take place.
“Steady gains in construction are expected over the next year, supported by still-strong fundamental demand for housing,” senior economist at BMO Capital Markets, Jennifer Lee, said to the Aurora Sentinel. “But acting as a bit of a roadblock are problems that the builders face: Rising lumber costs, and shortage of labour and lots to build on, which will boost pricing.”
Thus far, builders have concentrated on building single-family houses, and not so much on rental apartments. Accordingly, housing starts for single-family houses have gone up by 7.9 per cent, while the construction of multi-family homes have fallen 4.2 per cent.
However, housing starts in the Northeast and Midwest jumped by 83.7 per cent and 22 per cent accordingly, though that incredible growth will not likely be sustained, sales of homes in the West increased slightly, but saw a decrease in the South. Building permits – an indicator of construction in the future – witnessed a 7.4 per cent upward bump.
Construction firms have begun to rein in their expectations, though they are confident that the demand will continue.
Sources: The Associated Press, Aurora Sentinel