Data compiled by the Department of Housing and Urban Development (HUD) and the Commerce Department notes housing starts held firm in July.
Officials said housing starts inched up 0.9 percent last month to a seasonally adjusted annual rate of 1.17 million units, adding the reading represents the number of housing units builders would begin if they kept the pace for the next 12 months.
“Builder confidence remains solid, although it has fallen back somewhat in recent months due to rising construction costs in 2018, including lumber,” Randy Noel, National Association of Home Builders (NAHB) chairman, said. “As builders grapple with higher costs, one positive development is that lumber prices have shown signs of easing the past two months off their record high levels posted in June.”
Permits, which officials said are often an indication of future housing production, rose 1.5 percent to 1.31 million units in July while single-family permits posted a modest gain of 1.9 percent to 869,000. Multifamily permits were relatively unchanged, according to the report, up 1.7 percent to 410,000.
Officials said some projects are experiencing construction start delays due to cost concerns, with the number of single-family units authorized but not started up 25 percent since July 2017.
“Supply-side challenges including increases in material prices and chronic labor shortages are affecting affordability in many markets,” Robert Dietz, NAHB chief economist, said. “However, consumer demand remains strong due to a growing economy and job market and favorable demographics.”
Dietz said on a year-to-date basis, single-family construction has shown steady progress, up 7.2 percent, while 5-plus multifamily production is up 3.4 percent.