Pace of US home construction hits 11-year high

Pace of US home construction hits 11-year high
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Washington: A surge of construction in the Midwestern United States last month brought American homebuilding to its fastest pace since before the financial crisis, according to government data released Tuesday.

The May bump was driven almost entirely by faster construction of apartments and single-family homes in the Midwest region — which enjoyed warmer-than-usual weather after a snowy April and saw its biggest gains in more than four years.

Elsewhere construction stagnated or fell, according to the Commerce Department. Industry analysts say rising materials costs and scarce labor have weighed on homebuilding, driving up prices amid strong demand.

Total housings starts rose five percent to an annual rate of 1.35 million, the fastest rate since July of 2007, overshooting economists’ forecast of 1.32 million, the figures showed.

The result put construction 20.3 percent above the pace recorded in May of last year.

With the exception of the Midwest, the results were well within broad margins of error, making them subject to heavy revisions, and Commerce Department officials caution that trends may take as much as six months to appear in the data.

Meanwhile, permits for new construction, a sign of supply in the pipeline, fell 4.3 percent for the month to a rate of 1.3 million, undershooting expectations in the second straight monthly decline, possibly reacting to falling home sales.

Construction in the closely watched single-family segment rose 3.9 percent despite declining in the West and South and rising only moderately in the Northeast.

In the Midwest, however, overall housing construction soared 62.2 percent to reach an annual rate of 266,000 units, the fastest pace since September of 2006 and the biggest monthly jump since February of 2014.

Single-family housing in the Midwest grew by a slower but still very strong 44.4 percent to a 156,000-unit annual rate, also the largest increase since 2014.

AFP