Fall in construction spending surprises experts
WASHINGTON — U.S. home construction fell a surprisingly sharp 9.5% in April and economists attributed that partially to builders who delayed projects because of a surge in lumber prices and other supply constraints.
The April decline left construction at a seasonally adjusted annual rate of 1.57 million units, the Commerce Department said Tuesday. That was down from a rate of 1.73 million units in March, which had been the best showing since homes were constructed at a rate of 1.74 million units in July 2006 at the peak of that decade’s housing boom.
Applications for building permits, considered a sign of future activity, rose 0.3% in April to an annual rate of 1.76 million units, suggesting that the April construction dip will be temporary.
Economists linked the April decline to reports of builders delaying projects because of soaring lumber prices and snarled supply chains that have made it difficult to get products like appliances.
The price of lumber alone has added $35,872 to the price of an average single-family home, according to the National Association of Home Builders. Part of those increases are border taxes imposed by the Trump administration in a trade dispute with Canada. There was also a temporary shut-down in production when the pandemic hit a year ago.
Even with the higher prices, economists expect housing, one of the stand-out economic performers in the pandemic, will continue to show strength in 2021.