Construction Production Drops as Material Costs Surge
Building homes is steadily getting more expensive, complicating matters for homebuilders and home buyers alike.
According to the latest residential construction reports from the U.S. Census Bureau, homebuilding activity in the U.S. fell significantly in April in the face of rising material costs. Overall housing starts dropped 9.5 percent to a seasonally adjusted annual rate of 1.569 million units in April. Single-family residential starts fell 13.4 percent.
“Housing starts and permits posted a monthly decline in April, as escalating prices for lumber and other building materials price out some home buyers from an otherwise hot housing market,” said Chuck Fowke, chairman of the National Association of Home Builders. “Policymakers need to prioritize the U.S. supply chain for items like building materials to ensure builders can add the additional inventory the housing market desperately needs.”
Over the last several months, homebuilding industry representatives have been working with lawmakers to try and slow the rising costs of construction materials, especially lumber. However, recent reports suggest building material costs are still rising, complicating homebuilding for the near future.
“While housing starts were strong at the beginning of the year, due to home builders constructing homes that were sold pre-construction, higher costs and limited availability of building materials have now paused some projects,” said NAHB Chief Economist Robert Dietz.
But it’s not all doom and gloom for the housing industry. Demand for housing is high heading into the summer and supply remains low. There should be plenty of opportunities for home builders to build new homes in 2021. It just remains to be seen how expensive those homes will be to build or to buy.