US housing starts slow — builder optimism falls

US homebuilding rebounded less than expected in May 2021 as 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 latest report from the US Department of Commerce also showed permits for future home construction falling to a seven-month low. Housing completions also declined while the number of homes authorized 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.

Housing starts rose 3.6% to a seasonally adjusted annual rate of 1.572 million units last month. Data for April was revised down to a rate of 1.517 million units from the previously reported 1.569 million units. Groundbreaking activity rose in the Midwest, the West and the densely populated South, but fell in the Northeast.

Single-family homebuilding, the largest share of the housing market, increased 4.2% to a rate of 1.098 million units. Starts for the volatile multi-family segment rose 2.4% to a pace of 474,000 units.

A June 15 survey from the National Association of Home Builders showed confidence among single-family homebuilders at a 10-month low. The NAHB blamed the ebb in sentiment on the high costs and unavailability of building materials.