Breitbart: The Housing Market Declares Independence from the Fed

Construction spending on single-family homes rose for the first time this year in May, data released by the Commerce Department showed on Monday. This was not just a tick or two up but a 1.7 percent increase after seasonal adjustments, more than reversing the last two months of falling spending.

On an unadjusted basis, this is actually the fourth consecutive month of sequentially increasing spending on single-family home construction.

While the construction figures are adjusted for seasonality, they are not adjusted for price changes. Back in the prepandemic era of longstanding low-inflation, that did not matter all that much. These days it can make a difference in assessing whether growth reflects actual increases in activity or just higher levels of nominal spending.

So, what do the inflation data tell us this time? The producer price index for construction materials for intermediate demand was flat in May, meaning prices were unchanged. They rose 0.1 percent in each of the previous four months after falling 0.5 percent in December. Prices for components for construction fell 0.2 percent in May. In other words, the May construction boom very much represents an increase in real activity.

Note also that construction payrolls rose by 25,000 in May, the second consecutive rise following April’s gain of 13,000. There are now over 300,000 more people employed in construction than at the prepandemic peak. After a brief downturn in March, payroll figures returned to a new peak in April and then broke that record in May.

The hiring spree in construction is not over. Job openings in construction at the end of April, the most recent data available, rose to 383,000 from 315,000 a month earlier. Although openings are below their all-time peak of 488,000 from last December, the current vacancy level is very high by historical standards. There are three times as many openings in construction as there are unemployed persons in the sector.