Washington, (UNI/Sputnik): Construction of new homes in the United States fell in January, according to data from the US Commerce Department on Thursday that showed builders pausing for the first time in four months as lumber prices shot up.
Housing starts, a measure of homebuilding, decreased 4.1% in January compared with December, to a seasonally adjusted annual rate of 1.638 million. The decrease was the first monthly dip since the end of September.
Prices of lumber, a key ingredient in homebuilding, rallied 39% back-to-back in November and December, although they declined 15% in January. The commodity resumed its rally in February, rising 32% month-to-date.
Economists polled by US media had expected a decline of just around 0.7% on the average for January.
While the sharper-than-expected drop jolted some, others remained positive that the pace of growth in the residential market was far from over. ?It’s going to be a very busy construction season,? economist Adam Button said in a post on ForexLive, referring to the latest housing starts.
Dire housing shortages in the United States since the financial crisis of 2007-2008 and last year’s coronavirus pandemic measures have led to a scramble among first-time home buyers, triggering record high prices.
To compound the problem, the Federal Reserve is expected to raise interest rates by as many as five to seven times this year to curb inflation growing at its fastest pace in four decades. That has worsened the race among first-time buyers of homes eager to lock in before the rate hikes kick in.
Sales of new homes in the United States shot up by 12% in December from a month earlier as prospective buyers flocked to the property market ahead of the impending interest rate hike.