Supply shortages and high real estate prices outweigh the strong demand.
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New housing starts continued to decline in the United States in October, still dampened by supply shortages and high house prices, despite continued strong demand.
Last month, 1.520 million homes and buildings began construction nationwide, on an annualized, seasonally adjusted basis, 0.7% lower than in September, Commerce Department data released Wednesday.
It is also less than the 1.590 million expected by analysts and it is only 0.4% more than in October 2020, in full real estate euphoria.
In addition, the data for September have been revised downwards: in the end 1.530 million projects have started, less than the 1.555 million initially announced.
“The demand for housing continues to exceed supply, despite dizzying price increases. First-time buyers are excluded from the housing market and flock to rentals on their return to offices, ”after having teleworked since March 2020, underlines Yelena Maleyev, economist for Grant Thornton, in a note.
The number of building permits issued, by contrast, rebounded after falling in September. This leading market indicator makes it possible to predict the number of projects that will then be launched.
In October, 1.650 million permits were issued at an annualized rate, an increase of 4% over one month and 3.4% over one year, and a little better than the 1.640 million that were expected by analysts.
For September, the data has been revised downwards, with 1.586 million permits issued, instead of 1.589 million.
The construction sector had had a good time with the pandemic, thanks to historically low interest rates and the development of teleworking which allowed many families to leave the city.
The peak was recorded in March 2021, with 1.725 million housing starts, the highest level since July 2006.
But since then, global supply difficulties have pushed up the prices of building materials and employers are struggling to recruit workers, contributing to soaring house prices.
It is now difficult for many households, especially first-time buyers, to buy a home.
“The prices of single-family homes have skyrocketed since the start of 2021, completely excluding many potential buyers”, and “the lack of available land is a growing concern,” notes Yelena Maleyev.
Interest rates are still at their lowest, but the US central bank (Fed) could start in 2022 to raise its key rates, which will affect home loans, and “will make the cost of buying a home even higher, ”she warns.
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