“Maybe the high demand and rising prices for housing is spurring builders to pick up the pace, despite high costs in lumber and labor,” Robert Frick, a corporate economist at Navy Federal Credit Union, said in a statement Wednesday.
Indeed, homebuilder sentiment took a hit in the opening days of July as steep lumber costs – believed to be in part a byproduct of Canadian lumber tariffs levied earlier this year by President Donald Trump’s administration. But the higher materials costs don’t seem to have meaningfully slowed home construction in June.
And, even more optimistically, new construction projects appear to be accelerating down the pike. The number of building permits issued last month climbed 7.4 percent from May’s total and were up 5.1 percent from a year prior. Permits dropped off in April and May but managed to rebound to their third-highest level of the year last month.
The number of completed housing projects, meanwhile, jumped 5.2 percent on the month and 8.1 percent on the year. Again, though, that progress appeared to almost exclusively benefit those looking to live in multifamily buildings, as completed buildings jumped 17.9 percent over the month, compared with a modest 0.4 percent gain in single-family completions.
“Faster household formations, mostly as members of the millennial cohort find jobs and increasingly live independently, should keep the demand for multifamily units strong. The number of vacant housing units for rent has been little changed in recent quarters at around the lowest levels since 2000,” David Berson, a senior vice president and chief economist at Nationwide Mutual, said in a statement Wednesday.
Berson went on to note that, although the housing gains in recent months have slowed “from the relatively rapid pace seen at the end of 2016 and beginning of this year,” home construction is still trending in the right direction
“New home sales are moving higher in response to solid job gains, faster wage growth, still low mortgage rates, and record high household net worth. This should push single-family starts upward over the remainder of 2017,” he said.