As lumber prices soared, housing starts fell 6% in January to a seasonally adjusted annual rate of 1.58 million units, according to www.cnbc.com. The rate was lower than economists’ expectations of 1.658 million units.
However, applications for building permits, a good indication of future activity, surged 10.4% to 1.881 million units.
After increasing for eight straight months, single-family starts fell 12.2% to 1.162 million units. Meanwhile, multifamily starts soared 17.1% to 418,000 units.
The housing market has been a top performer during the COVID-19 pandemic, supported by lower mortgage rates and demand for more spacious accommodations. However, expensive inputs and lack of land are challenging housing market gains. Builders complained record-high lumber prices were “adding thousands of dollars to the cost of a new home and causing some builders to abruptly halt projects.”
