Home builders are optimistic about the economy, but trouble finding good workers might be limiting how much they can do. Housing starts fell again in May.
WASHINGTON (MarketWatch) — Construction on new houses fell in May for the third month in a row even though builders are optimistic about the economy, perhaps a sign a shortage of skilled workers is holding the industry back.
The pace of so-called housing starts declined by 5.5% to an annual rate of 1.09 million, marking the lowest level in eight months. Economists polled by MarketWatch had forecast housing starts to total 1.23 million.
Home builders are now working at a slower pace than they were one year ago. They’ve especially pared back on apartment buildings and other large multi-dwelling units, giving more emphasis to single-family homes.
More evidence of a labor shortage might be visible in building permits, too. They fell 4.9% in May to an annual rate of 1.17 million, the lowest level in 13 months. Permits are also below year-ago levels,
In May, the biggest drop-off occurred in the South and Midwest. Construction rose slightly in the West and was flat in the Northeast.
For years the housing market has experienced a mini-renaissance of sorts as a steadily growing economy, rising employment and ultra-low interest rates enabled home people to buy homes. Yet builders increasingly complain they cannot find enough good construction workers to get the job done.
Prices for wood and other raw materials have also risen and the Federal Reserve has embarked on a series of increases in a key U.S. interest rate that helps determine the cost of borrowing, a potential brake on future sales.
In early action U.S. futures markets pointed to a slightly higher opening for the Dow Jones Industrial Average DJIA, -0.07% .
Any exchange-traded fund for U.S. home builders XHB, -0.67% is up 14% this year.