Construction on new homes rose slightly in May, but high lumber prices and labor shortages have stymied builders and could leave many customers frustrated as the busy U.S. summer home-buying season gets underway. Builders started construction on new homes at a 1.57 million annual pace in May. In other words, that’s how many houses would be started in a year if construction companies did the same amount of work every month as they did in May. The increase was somewhat of mirage, however. April’s originally reported increase of 1.57 million was trimmed to 1.52 million. Permits to build new homes, meanwhile, fell 3% last month in another sign of the trouble builders are running into. They slipped to an annual rate of 1.68 million from a revised 1.73 million in April.
The Federal Reserve announced yesterday that they will leave interest rates unchanged and continue to buy $120 Billion worth of bonds in the market every month. The Fed also said they might hike interest rates earlier than it had previously expected, penciling in two interest rate hikes in 2023. In their statement, the Fed stuck to their guns and said the recent burst of inflation would be transitory. At the same time, they acknowledged that inflation would be much higher this year, raising its forecast for headline inflation to 3%. According to the Fed, 11 of 18 Fed officials expect at least two rate hikes in 2023. In March, only seven expected one hike. Seven officials now see the first hike next year, up from four in March.