U.S. Homebuilding Surges Near 11-Year High

Home building jumped to near an 11-year high in May as the U.S. economy continued to show signs of acceleration.

Housing starts ran at a seasonally adjusted annual 1.35 million annual rate in May, the Commerce Department said Tuesday. That exceeded the 1.3 million page expected by economists. This is the fastest annual pace for home builders breaking ground on new construction since 2007. The pace was 5 percent higher than April and 20.3 percent higher than a year ago. The faster pace of construction likely explains most of the increase in construction materials. The price of framing lumber, as measured by the Random Lengths Composite Framing Price index, rose 10 percent in May, prompting the National Association of Home Builders to decry Trump administration tariffs on lumber imported from Canada. But with housing starts up 20.3 percent compared with a year prior, it is more likely the bulk of the increase in price was due to rapidly increasing demand. The big jump in starts also suggests that higher materials costs are not discouraging builders from building. A survey released Monday showed that homebuilder sentiment weakened slightly in June but remained near record highs. (Read more)

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