Timber prices have risen as the US economy has reopened with a bang Expand

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Timber prices have risen as the US economy has reopened with a bang

Timber prices have risen as the US economy has reopened with a bang

Timber prices have risen as the US economy has reopened with a bang

Lucia Mutikani

US 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 Commerce Department yesterday 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.

“Shortages of materials and labor 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.

Housing starts rose 3.6pc 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.

Economists polled by Reuters had forecast starts increasing to a rate of 1.630 million units.

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Last month’s increase still left starts below March’s rate of 1.725 million units, which was the highest level since June 2006.

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Building starts, however, jumped 50.3pc on a year-on-year basis in May.

Though lumber prices dropped from a record high set in early May, softwood lumber prices increased 154.3pc year-on-year in May, according to the latest producer price data.

A survey from the National Association of Home Builders on Tuesday showed confidence among single-family homebuilders fell to a 10-month low in June.

The NAHB blamed the ebb in sentiment on “higher costs and declining availability for softwood lumber and other building materials,” noting that was driving up prices of new houses “which has slowed the strong pace of home building.”

Tariffs on steel imports are also adding to building costs.

Rising timber and other prices have pushed US inflation sharply higher.