New home construction missed expectations for the second month in a row, weighed down by rising costs of labor, lumber, and other materials as the U.S. confronts the strongest bout of inflation in decades.
Builders broke ground on new homes at a seasonally-adjusted annual rate of 1.57 million in May, the Census Bureau said Wednesday. That is 3.6 percent higher than the upwardly revised April figure but short of the 1.65 million expected.
New permits to build, which are an indication of future activity and a gauge of builder confidence, unexpectedly fell 3 percent to 1.68 million. Economists had forecast 1.738 million.
Single‐family housing starts—where the housing shortage is most acute—in May came in at a rate of 1.098 million, a 4.2 percent gain over April. Single-family permits rose by 1.6 percent to a rate of 1.148 million.
A report from a trade group Tuesday showed builder confidence slumping as high costs of materials, lumber shortages, and a labor shortage has pushed up construction costs and priced some would-be buyers out of the market.