Residential construction rebounded from a three month decline in June with housing starts increasing to 1.22 million, according to the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.
The number of housing projects started last month shows an 8.3% increase from the May figures and a 2.1% increase from June of last year.
Homebuilders still have the rising cost of lumber and a skilled labor shortage to contend with while they’re trying to gain momentum. But it’s not for nothing that housing starts outperformed economist estimates by about 60,000, or 5%.
The June total is about 300,000 shy of the the 1.5 million historical average, but the increase is a good sign for the U.S. real estate market.
Building permits granted for single-family homes increased as well, signaling that the upward trend could continue through the end of the year.
“For all of 2017, total starts should be around 1.25 million units, the highest level since 2007,” Nationwide Chief Economist David Berson told HousingWire.
But there are other factors that could slow down the housing growth even as it seems the demand for new homes is on the rise.
“Home building still requires manual labor as a key input into the production process,” Mark Fleming, chief economist at First American Financial Corp. said. “It’s very hard to increase housing starts without increasing residential construction employment.”
With many contractors facing a shortage of skilled labor in the industry that could be difficult.