WASHINGTON- US homebuilding rose to a nine-month high in December amid a surge in multi-family housing projects, but soaring prices for materials after the government nearly doubled duties on imported Canadian softwood lumber could hamper activity later this year.
The report from the Commerce Department on Wednesday also showed the housing construction backlog surged to a record high last month, underscoring the challenges builders are facing from supply strains, including labor shortages. Completions tumbled as well. Rising mortgage rates could also restrain homebuilding.
“Builders are gladly trying to meet demand, but supply problems and labor shortages are slowing them down,” said Jennifer Lee, a senior economist at BMO Capital Markets in Toronto. “Softwood lumber duties are going to hurt this spring.”
Housing starts rose 1.4 percent to a seasonally adjusted annual rate of 1.702 million units last month, the highest level since March. Economists polled by Reuters had forecast starts falling to a rate of 1.650 million units.
The volatile multi-family housing segment accounted for the rise in homebuilding last month, with starts for buildings with five units or more surging 13.7 percent to a rate of 524,000 units. There is strong demand to rental housing.
Single-family housing starts, which account for the largest share of the housing market, dropped 2.3 percent to a rate of 1.172 million units last month. Single-family homebuilding soared in the Northeast and Midwest, likely boosted by unseasonably mild temperatures.
December 2021 was the warmest December on record, according to the National Centers for Environmental Information.
The densely populated South, where the bulk of homebuilding occurs, reported an 8.2 percent decrease in single-family starts. Homebuilding also fell in the West.
Housing starts totaled 1.595 million in 2021, up 15.6 percent from 2020. But the outlook for home building this year is uncertain. The United States last November nearly doubled the duties on imported Canadian softwood lumber to 17.9 percent from 9 percent after a review of its anti-dumping and countervailing duty orders.
According to the National Association of Homebuilders on Tuesday, the aggregate cost of residential construction materials had increased almost 19 percent since December 2021.
The NAHB said higher material costs and shortages were adding weeks to typical single-family home construction times.
Prices for softwood lumber, used for framing, soared 24.4 percent in December after rising 6.9 percent in November, according to the latest producer price data. Lumber futures have also surged.
Stocks on Wall Street were lower. The dollar slipped against a basket of currencies. US Treasury prices rose.
The backlog of houses authorized for construction but not yet started shot up 1.1 percent to a rate of 270,000 last month, the highest on record. Permits for future homebuilding jumped 9.1 percent to a rate of 1.873 million units in December, an 11-month high. They accelerated 17.2 percent in 2021.
Permits are now running ahead of starts, which should underpin homebuilding in the coming months. Permits for buildings with five units or more soared 19.9 percent to a rate of 675,000 units. Single-family building permits rose 2.0 percent to a rate of 1.128 million units. – Reuters
