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U.S. housing starts rise in June, as permits fall, reports Commerce Department

PUBLISHED ON 2021-07-21 03:10:00 EST Yashasvini

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The U.S. Commerce Department reported an increase in home building in June, even as permits for future home construction fell to an eight-month. Low labor and land shortages, along with expensive building materials have prevented builders from making the most out of the spike in housing demand.


On Tuesday, the Commerce Department said that housing starts rose 6.3% to a seasonally adjusted annual rate of 1.643 million units in June, which continued to be lower than March's rate of 1.737 million units, the highest since July 2006. Data for May was revised down from a rate of 1.572 million units to 1.546 million units. The West and South reported an increase in home building, but the figures fell in the Northeast and Midwest.


Single-family starts were up 6.3% to a rate of 1.160 million units. The multi-family home building category rose 6.2% to a pace of 483,000 units. Permits for future home building fell 5.1% to a rate of 1.598 million units in June, the lowest level since October 2020. Permits are way behind starts, indicating that home building will slow in the coming months.


Despite lumber futures recording almost a 70% fall from a record high in early May, the prices of other building materials such as steel, concrete, and lighting rose, boosting the housing prices. Softwood lumber prices have also recorded a 125.3% increase, year-on-year in June, as per the latest producer price data.


Along with the increased cost of building materials, a shortage of houses, low mortgage rates, and the need for larger accommodations during the pandemic have boosted housing prices. Migrations from cities to the suburbs in search of spacious accommodations, home offices, and schools during the COVID-19 pandemic have also contributed to the hike.


Meanwhile, home builders and a group of other stakeholders met last Friday with White House officials, including Commerce Secretary Gina Raimondo and Housing and Urban Development Secretary Marcia Fudge, to discuss strategies to address the short-term supply chain disruptions in the home building sector.


(With inputs from CNBC)

Picture Credits: iStockPhoto

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