WASHINGTON (Reuters) – U.S. homebuilding unexpectedly fell in October as activity remains constrained by shortages of materials as well as scarce land and labor.
Housing starts slipped 0.7% to a seasonally adjusted annual rate of 1.520 million units last month, the Commerce Department said on Wednesday. Data for September was revised down to a rate of 1.530 million units from the previously reported 1.555 million units. Economists polled by Reuters had forecast starts rebounding to a rate of 1.576 million units.
Permits for future homebuilding increased 4.0% to a rate of 1.650 million units in October.
Ida, which struck in late August, caused unprecedented flooding and depressed homebuilding in the Northeast and the densely populated South in September. Aside from the weather, homebuilding has essentially been treading water as builders battle shortages and higher prices of raw materials.
Starts have declined from the 1.725 million unit-pace scaled in March, which was more than a 14-1/2-year high. Still, home building remains underpinned by a severe shortage of previously owned homes on the market, which has resulted in record house price increases. There is a huge backlog of houses authorized for construction but not yet started.
A survey from the National Association of Home Builders on Tuesday showed confidence among single-family homebuilders rose for the third straight month in November, but noted that “supply-side challenges, including building material bottlenecks and lot and labor shortages, remain stubbornly persistent.”
Lumber remains expensive and copper prices, another essential material in home building, are high. In addition, there were about 333,000 job openings in the construction industry as of the end of September, and according to the NAHB, availability of land for building is at multi-decade lows.
The materials squeeze could ease during winter, a typically slow season for homebuilding in the Northeast and Midwest.
(Reporting By Lucia Mutikani; Editing by Chizu Nomiyama)
