The seasonally adjusted rate of housing starts in the month of May, as announced by the US Department of Commerce was increased by 3.6% month-on-month to 1,572,000 units, picking up from the decrease in April. A serious shortage of existing homes prompted housing; however, housing construction continues to be squeezed by soaring timber prices and a shortage of other building materials. The market forecast was 1.63 million units.
Robert Flick, the corporate economist at Navy Federal Credit Union, said, “Constructors struggle to build new homes due to lack of materials and labor, while demand remains strong. Demand for home buyers is still strong for the foreseeable future. New and existing homes should be prepared for tight inventory and rising prices. “
By region, it increased in the Midwest, West, and densely populated southern regions but decreased in the north-eastern region. The number of construction that starts in April was revised downward from the originally announced 1,569,000 units to 1,517,000 units. In March, it was 1,725,000 units, the highest level since 2006. In May, it increased by 50.3% from the same month of the previous year.
Timber prices fell from record highs in early May, but coniferous forests rose 154.3%in the month of May, in comparison to the same month of May in 2021, to the same month last year, according to the Wholesale Price Index (PPI). The number of permits fell 3.0% month-on-month to 1,681,000 units, the lowest level in seven months. It increased by 34.9% from the same month of the previous year. The number of permits was slightly higher than the number of construction, suggesting a gradual increase in housing construction in the coming months.
The number of single-family home construction starts, which occupy the largest market share, increased by 4.2% to 1,098,000 units. The number of single-family home permits fell 1.6% to 1.13 million. By the end of May, the number of approved but not started constructions increased 0.8% to 238,000 units, the highest since the start of statistics in January 1999.
The number of construction starts for apartments with large fluctuations increased by 2.4% to 474,000 units. On the other hand, the number of permits decreased by 5.8% to 551,000 units. The number of completed houses decreased by 4.1% to 1,368,000 units. The number of completed single-family homes decreased by 2.6% to 978,000. In the real estate industry, it is estimated that monthly housing starts and completions will need to reach 1.5-1.6 million units to close the inventory gap. The number of under-constructed homes has increased by 0.5% to 1,324,000.