There’s some good news on the new home front, as construction of new single-family homes continued increasing in June. But the news isn’t all good as prices continued rising as well.
According to a new report from the Department of Housing and Urban Development and the Census Bureau, new single-family home construction rose by 6.3% in June over May’s figures.
That marks the second straight month that new construction has risen after bouncing back and forth between increasing and decreasing for much of the year.
In February, new home construction was down by more than 10% from January. In March, housing starts increased by 15.3%. Then, in April, housing starts fell by more than 13% before climbing in May by 4.2%.
June also saw housing starts increase, but the National Association of Home Builders cautioned that rising new home prices due to continuing material shortages are impacting the market.
“While lumber prices have just recently begun to trend downward, builders continue to deal with rising prices of other building materials, such as oriented strand board, and major delays in the delivery of these goods,” NAHB Chairman Chuck Fowke said.
That is impacting the price of construction and consequently, the price of the new home to the buyer.
As a result of construction costs, the permitting of new single-family homes fell in June by 6.3% from May’s figures.
“The recent weakening of single-family and multifamily permits is due to higher material costs, which have pushed new home prices higher since the end of last year,” said NAHB Chief Economist Robert Dietz. “This is a troubling sign for future housing production. This is a challenge for a housing market that needs additional inventory.”
However, the NAHB notes that the number of single-family homes under construction is up 32% over last year, with 675,000 homes currently being built. Upon completion, those homes should help alleviate some of the housing market’s inventory concerns.