US new home construction misses target as lumber prices climb

High lumber prices and shortages of material and labour have builders struggling to boost production of new homes, the US Department of Commerce said on Wednesday.

United States homebuilding rebounded less than expected in May as very expensive lumber and shortages of other materials continued to constrain builders’ ability to take advantage of an acute shortage of houses on the market. The report from the US Department of Commerce on Wednesday also showed permits for future home construction falling to a seven-month low. Housing completions also declined while the number of homes authorised for construction but not yet started rose to the highest level since 1999, indicating supply will likely remain tight for a while and boost house price inflation. “Shortages of materials and labour have builders struggling to increase production of new homes, though the demand remains strong,” said Robert Frick, corporate economist at Navy Federal Credit Union in Vienna, Virginia. “Potential homebuyers should expect tight inventories and rising prices for both new and existing homes for the foreseeable future.”