WASHINGTON: US homebuilding surged to nearly a 15-year high in March, but soaring lumber prices amid supply constraints could limit builders’ capacity to boost production and ease a shortage of homes that is threatening to slow housing market momentum.
The sharp rebound reported by the Commerce Department on Friday added to robust retail sales in March in suggesting that the economy was roaring after a brief weather-related setback in February. Increasing Covid-19 vaccinations, warmer weather and massive fiscal stimulus are driving the economy, with growth this year expected to be the strongest in nearly four decades.
But caution is starting to creep in among consumers as the course of the pandemic remains uncertain and inflation is showing signs of heating up. Other data on Friday showed consumer sentiment rose moderately in early April.
“We’re in a unique situation with the economy beginning to rebound from the worst of the pandemic’’, said Robert Frick, corporate economist at Navy Federal Credit Union in Vienna, Virginia. “Uncertainties remain, with many businesses yet to reopen, unemployment still high, and Covid-19 levels lower but persistent.”
Housing starts surged 19.4 per cent to a seasonally adjusted annual rate of 1.739 million units last month, the highest level since June 2006. Economists polled by Reuters had forecast starts would rise to a rate of 1.613 million units in March.
Starts soared 37.0 per cent on a year-on-year basis in March. Homebuilding slumped in February as large parts of the country reeled from unseasonably cold weather, including winter storms in Texas and other parts of the densely-populated South region.
Groundbreaking activity increased in the Northeast, Midwest and South, but fell in the West. Permits for future home building rose 2.7 per cent to a rate of 1.766 million units last month, recouping only a fraction of February’s 8.8 per cent plunge. They jumped 30.2 per cent compared to March 2020.
“While housing demand is expected to remain strong, we expect it to diminish somewhat as the year progresses’’, said Doug Duncan, economist at Fannie Mae in Washington.— Reuters
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