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United States: unexpected slowdown in the start-up of new construction sites in October

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Construction of new homes in the United States unexpectedly slowed in October, driven by a decline in single-family projects with the supply chain crisis taking its toll on construction activity. New residential yards fell 0.7% last month to a
annualized rate of 1.52 million after a revised downward pace of 1.53 million in September. The Bloomberg consensus indicated a pace of 1.58 million.

Permits to build, a proxy for future construction, rose to 1.65 million annualized units in October. Indications suggesting that builders are still struggling to open new yards due to continuing labor shortages and high
costs of materials. Meanwhile, demand far exceeds supply, keeping house prices high and limiting some buying activity.

What is striking is that the decline in construction starts for single-family homes is offset by a sharp increase in building permits, producing the largest backlog since 2006. The number of single-family homes authorized but not yet started – a measure of arrears – it rose to 152,000 in October.

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