U.S. homebuilding accelerated in August despite the ongoing materials shortage.
Housing starts rose 3.9% last month to a seasonally adjusted annualized rate of 1.615 million, the Commerce Department said Tuesday. Analysts surveyed by Refinitiv were expecting 1.555 million starts.
Permits for future construction jumped 6% month over month to 1.728 million, ahead of the 1.6 million that was anticipated.
Supply chain disruptions caused by the pandemic have left builders grappling with materials shortages and higher costs following the reopening of the U.S. economy.
But homebuilding could accelerate further in September after the National Association of Home Builders/Wells Fargo Housing Market Index released Monday showed builder sentiment ticked up one point in September as some materials prices fell and demand remained strong.
Although soaring lumber prices began to ease in May, many builders did not see relief until recently, as higher-priced materials had yet to work their way through the economy.
The cost of strand board, a common material used in homebuilding, had soared by more than 500% this year. The increased costs added $36,000 to the price of building a new home.