Supply chain bottlenecks lead to a 1.6% drop in U.S. housing construction | Construction News

The fall in September was because low interest rates attracted buyers into the market, but rising material costs pushed up prices.

As builders continue to be dragged down by supply chain bottlenecks, the US housing construction industry fell 1.6% in September.

The US Department of Commerce reported on Tuesday that the seasonally adjusted annual growth rate of the housing construction industry in September was 1.56 million units, which was 7.4% higher than a year ago. The August figure was revised upwards from 1.62 million to 1.72 million.

Application for building permits is a barometer of future activities, which fell by 7.7% from August to 1.59 million, but there is little change from September 2020.

Low interest rates and the desire for more space have attracted buyers into the market, but rising material costs and years of supply shortages have pushed up prices. Economists and builders say that although the median price of new homes is about 20% higher than a year ago, demand remains strong.

“Demand momentum still seems to be positive,” said Ruby Rafaluchi, an economist in high-frequency economics. “But given the high input costs and shortages are still unfavorable factors for builders, it is difficult for supply to catch up.”

Apartment construction fell by 5.1% from August to September, while single-family housing construction remained unchanged from the previous month at 1.1 million units.

Construction activity by region fell by 27.3% in the northeast and 6.3% in the south. The western region saw the largest increase, with the operating rate rising 19.3% in August, while the Midwest rose 6.9%.

Stephen Stanley, an economist at Amherst Pierpont, said: “This year’s situation has not changed from one month to the next.” “Builders are doing everything they can, but it’s not enough to keep up with the pandemic. The resulting surge in demand.”

The National Association of Home Builders and Wells Fargo Bank’s monthly survey on builder sentiment showed that sentiment in October rose to 80 from 76 in September. The index set a historical record of 90 in November last year.