Home construction in the United States fell 1.6% in September | Economic news

By MATT OTT, AP Business Writer

SILVER SPRING, Md. (AP) — U.S. home construction fell 1.6% in September as builders continued to be hampered by supply chain bottlenecks.

The Commerce Department reported on Tuesday that the September decline left homebuilding at a seasonally-adjusted annual rate of 1.56 million units, 7.4% above the rate a year ago. year. The August number was revised up to 1.72 million from 1.62 million.

Building permit applications, a barometer of future activity, fell 7.7% from August to 1.59 million, but were almost unchanged from September 2020.

Low interest rates and a desire for more space drew buyers to the market, but rising material costs and a years-long supply shortage drove prices up. Economists and builders say demand remains strong, even though the median price of a new home is about 20% higher than a year ago.

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“Demand momentum still looks positive,” said economist Rubeela Farooqi of High Frequency Economics. “But supply is struggling to catch up given rising input costs and shortages that remain headwinds for builders.”

Apartment construction fell 5.1% from August to September, while construction of single-family homes was flat from the previous month at 1.1 million units.

Construction activity by region fell by 27.3% in the Northeast and by 6.3% in the South. The West saw the biggest gain, with housing starts up 19.3% from August, while the Midwest rose 6.9%.

“The story has been flat this year month over month,” said Stephen Stanley, economist at Amherst Pierpont. “Builders are doing everything they can, but it’s not enough to meet the explosion in demand created by the pandemic.”

A monthly builder sentiment survey by the National Association of Home Builders and Wells Fargo showed sentiment improved to 80 in October from 76 in September. The index reached a record high of 90 last November.

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