In March, US home construction reached a 15-year high, but rising lumber rates and supply problems restricted builders' ability to increase output and resolve the housing shortage that delays the housing market's acceleration. The Commerce Department's sharp turnaround on Friday added to strong retail sales in March, implying that the economy was growing again after a brief climate setback in February. The economy is being driven by rising COVID-19 vaccines, warmer weather, and significant fiscal stimulus, with this year's growth forecast to be the fastest in nearly four decades.

As the pandemic's trajectory remains uncertain and inflation showed some signs of picking up, buyers have become more cautious. Market sentiment grew slightly in early April, according to other data released on Friday.

“With the economy starting to recover from the severity of the pandemic, we're in a weird situation,” said Robert Frick, corporate economist at Navy Federal Credit Union in Vienna, Virginia. “Difficulties continue, with many businesses yet to reopen, unemployment staying high, and COVID-19 levels declining but remaining stable.” Last month, housing starts increased by 19.4% to a seasonally adjusted annual rate of 1.739 million units, the highest since June 2006. Starts is expected to grow to 1.613 million units in March, according to economists polled by Reuters.

In March, Starts increased by 37.0 % year over year. In February, homebuilding fell because of unseasonably winters in many places, like winter storms in Texas and other parts of the heavily populated South. The number of groundbreakings rose in the Northeast, Midwest, and South, but declined in the West. Last month, future home building permits increased 2.7 % to 1.766 million units, reimbursing just a fraction of February's 8.8 % drop In contrast to March 2020, they increased by 30.2 %.

“While housing demand is anticipated to stay high throughout the year, we expect it to reduce slightly,” said Doug Duncan, chief economist at Fannie Mae in Washington. “Homebuilders are also coping with supply issues, such as growing lumber and other material prices.”

As the pandemic enters its second year, desire for larger and more costly housing is accelerating the housing market, with millions of Americans choosing to work from home and distant schooling. Housing availability has been insufficient, with previously owned housing stock at all-time lows.

According to a survey released on Thursday by the National Association of Home Builders, single-family homebuilder trust increased in April, despite heavy buyer traffic. If the economy warms up in 2021, builders are searching for ways to “increase the availability of construction materials.” Consumers were worried about inflation earlier in the month. A separate study released on Friday by the University of Michigan showed that its initial consumer confidence index increased to 86.5 from 84.9 in March. The index was expected to grow to 89.6 points.

From 3.1 % in March, the survey's one-year inflation forecast soared to 3.7 % the highest level in nearly 10 years. Its inflation forecast for the next five years remained constant at 2.7 %.

Consumer and producer prices both rose sharply in March, as compelling domestic demand forced against supply shortages. Higher inflation, according to Federal Reserve Chair Jerome Powell and many economists, is only temporary, with supply chains required to adjust and be more functional.

Commodity prices are that due to supply disturbances caused by coronavirus-related constraints. According to the most recent producer price data released last week, softwood lumber, which is used for house frames and trusses, increased by a record 83.4 % year on year in March. Other construction materials, such as plywood, have also seen significant price increases. According to an Institute for Supply Management survey released earlier this month, port shortages on the West Coast, and winter in Canada that has closed mills and limited truck shipping, were all adding to the shortages that were pushing up building material prices.