Record Lumber Prices Drive U.S. Housing Starts to 9-Month Low

SEATTLE (Scrap Monster): The U.S. housing starts dropped to the lowest level in nine months in June. The permits declined for the third month in a row. The high price for lumber is cited as the primary reason for the downfall in U.S. housing markets. The shortages in land and labour have also contributed to the falling market condition.

According to recent data published Wednesday by the U.S. Department of Commerce, housing starts dropped sharply in June this year to hit the lowest level since September 2017. The starts were down by 12.3% to a seasonally adjusted annual rate of 1.173 million units, recording the highest percentage drop since November 2016. All the four regions recorded decline during the month. Also, building permits were down by 2.2% to an annual rate of 1.273 million units, hitting the lowest level since September last year.

ALSO READ: Softwood Lumber Shipments by Canada Dropped 1.7% in 2017

The month witnessed heavy decline in single and multifamily home construction. Single-family home building dropped significantly by 9.1% to 858,000 units in June 2018. Meantime, permits for single-family homes rose slightly by 0.8% during the month. Multi-family housing starts plummeted nearly 20% to 315,000 units. The permits for construction of multi-family homes too have dropped considerably by 7.6% to 423,000 units.

According to market participants, the imposition of anti-subsidy duties on imports of Canadian softwood lumber has boosted the price of houses, making it less affordable for many first-time buyers. The lumber and plywood costs have surged higher by more than 18% during the one-year period between May this year and May 2017. It essentially means that lumber that cost $32,000 last year for a typical home-build now costs approximately $40,000. Along with steep rise in material prices, home builders have also been impacted badly with shortage in land and labour.