US housing starts grew less than expected in May as construction bottlenecks stifled raging demand

home construction
  • US housing starts grew 3.6% in May to an annualized rate of 1.57 million, the Census Bureau said.
  • Economists expected a 3.9% jump. The April reading was also revised lower to indicate starts dropped 12.1% that month.
  • Builders are struggling to shore up home supply as demand remains elevated and construction costs soar.
  • See more stories on Insider’s business page.

New home construction bounced back in May, but still missed economist forecasts as supply-chain issues kept contractors from servicing unprecedented demand.

Housing starts rose 3.6% to an annualized rate of 1.57 million in May, the Census Bureau said Wednesday. Economists surveyed by Bloomberg held a median estimate for a 3.9% jump.

April’s rate was revised lower to 1.52 million, implying a 12.1% slide through the month.

Building permits – which serve as a more forward-looking indicator of residential construction – fell 3% to an annualized rate of 1.68 million. That’s the lowest level since October.

Separately, the number of one-family homes authorized but not yet started climbed to 142,000 last month, the highest since 2006. The gauge is often used as a measure of backlogs in the nation’s housing market.

The May report signals that, while home construction is picking up, the rebound is far from alleviating pressure in the red-hot housing market. Massive demand throughout the pandemic saw sales rates skyrocket and drag inventories to record lows. The imbalance between supply and demand has since led prices to surge and exacerbate affordability risks already lingering throughout the market.

Starts will fail to break out and instead waver near current levels for the rest of 2021, Nancy Vanden Houten, lead economist at Oxford Economics, said.

“Strong demand, a need for inventory, and homebuilder optimism will keep a floor under activity, but builders continue to face supply constraints that may hamper or at least postpone construction,” she added.

Builders have tried to shore up home supply, but their efforts have recently run up against severe bottlenecks. Lumber prices exploded higher in April and crept higher still in May before retracing only some of the rally. The surge helped boost the producer price index for construction materials another 4.6% higher last month after climbing 5.2% in April.

Even the lots where homes are built are in short supply. The New Home Lot Supply Index slid 10% to a record low in the first quarter of the year, housing analytics firm Zonda said in May.

For now, contractors are shifting the higher costs to buyers. Home prices in the US spiked 13.2% year-over-year in March, according to the S&P CoreLogic Case-Shiller Home Price Index. The May reading exceeded the 12.5% estimate and marked the largest one-year jump since December 2005.

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West Virginia had the largest population drop in the US from 2010 to 2020, the census shows

West Virginia
A lake in Bluefield, West Virginia.

  • West Virginia lost a higher percentage of its population than any other US state, per the census.
  • The lack of economic opportunity and low pay are two factors in the state’s population decline.
  • The poverty rate in West Virginia is 16%, higher than the national average.
  • See more stories on Insider’s business page.

From 2010 to 2020, West Virginia lost a higher percentage of its population than any other US state, according to new data from the US Census Bureau.

In 2010, the population of the Mountain State stood at 1.85 million, but by 2020, that number had declined to 1.79 million people.

The population loss of 3.2%, or roughly 59,000 people, made the state one of only seven others across the country that are set to lose a congressional district following the 2020 Census.

According to the Associated Press, some of the main reasons cited for West Virginia’s population loss are a lack of economic opportunity, low pay, the state’s political climate, and poor cell phone and internet service.

Read more: Exclusive: Secretary Pete takes viewers inside the DOT in the Biden administration’s weekly address as he sells the American Jobs Plan

The poverty rate in West Virginia is 16%, which is higher than the national average.

In 2019, the national poverty rate was 10.5%, according to the Census Bureau.

The Census data revealed that from 2015 to 2019, only 76% of the state’s households had broadband internet subscriptions.

In an attempt to stem further population losses, West Virginia officials are targeting remote workers who move to the state with $12,000 incentives, along with complimentary passes for recreational destinations including whitewater rafting, rock climbing, and horseback riding.

The state hopes to capitalize on the appeal of its ruggedness and open spaces in reversing its population losses.

“We want to give folks the opportunity to escape big cities,” state tourism cabinet secretary Chelsea Ruby told the Associated Press last month. “In West Virginia, there are no crowded places, long commutes or traffic jams. There’s just plenty of places to put down roots and explore the great outdoors.”

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High-earning Americans drove 2020’s migration boom, and it shows how wealth is splitting the millennial generation

suburbs
High-earners were most likely to move and buy a house in 2020.

Americans stopped moving around the 1980s, but that changed last year with remote work.

A new Apartment List report that surveyed 5,000 Americans and analyzed US Census data has confirmed the migration narrative of 2020: Remote work ignited a residential migration rebound as the number of movers increased by 14% to 16% from 2019 to 2020 – it was the first US migration increase in over a decade.

This has big implications for millennial homebuying in particular and wealth inequality in general. The ApartmentList data shows the migrants were largely high-income, meaning that migration was K-shaped, just like the uneven economy born by the coronavirus pandemic. With migration has come a boom in homebuying, and millennials have taken the lead in homebuying, with high-net-worth millennials at the top of the K.

Although the study doesn’t break down generational data, millennials likely comprise many of the high-income households, defined as those earning over $150,000. A previous Apartment List report revealed that the millennial homeownership rate climbed to 47.9% from 40% just three years ago. Many of these millennial homebuyers were likely the same as the 16% of high-income workers that moved over the past year, a 39% jump from the Census Bureau’s estimate of American migrants in 2019.

This marks a sharp contrast from the past decade, in which lower-income workers led migration patterns. Low-income households moved during the migration boom as well, per the report, but the high-income group is more likely to work in flexible jobs. They’ve taken advantage of remote work to move across the country in search of more space and more affordable housing.

Apartment List also found that high-income workers were twice as likely to purchase a home as low-income workers, which dovetails with millennials reaching peak homebuying age during the pandemic and leading the housing recovery. Historically low interest rates made more types of homes viable for the generation, at least for those who had enough money saved to win out bidding wars in a cutthroat market.

Other millennials were priced out as housing prices reached record highs, while others still couldn’t even fathom becoming homeowners. Many moved back home with their parents during the pandemic, either temporarily or permanently. According to a Pew Research Center report, 52% of young adults lived with at least one of their parents as of July 2020, topping the last high of 48% many decades ago, in 1940.

The millennial wealth gap

This migration divide exemplifies the intragenerational millennial wealth gap, which has widened during the pandemic. Such millennial inequality dates back to the Great Recession, with wealthier millennials faring well while their low-earning peers are struggling.

The affordability crisis millennials were already facing prepandemic has left some with little wealth to fall back on as they experience unemployment and other hardships during the coronavirus recession, causing some to move back in with their parents. But a smaller, higher-earning group with stable income has been able to save, invest, and even buy homes with extra money they would otherwise spend in non-pandemic times.

Millennials are experiencing their own K-shaped recovery, uniquely compounded by two recessions. Generational researcher Jason Dorsey, the president of the Center for Generational Kinetics, previously told Insider this could lead to an unequal recovery between these two groups, with those those who lost a job recovering longer than those who began the pandemic with a better financial backstop.

This uneven rebound might have an effect on migration as well. As the report concludes, continuing migration patterns could further redistribute wealth away from the country’s biggest and priciest cities.

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This map shows which US counties had more births than deaths over a year

  • The Census Bureau recently published 2020 population estimates for US counties.
  • We looked at natural population changes within the US, or the difference between births and deaths.
  • The above map shows which counties saw more births than deaths and vice versa from 2019 to 2020.
  • See more stories on Insider’s business page.

Recently released data from the Census Bureau shows which places in the United States had more births or more deaths between 2019 and 2020.

Last week’s release of county-level data included 2020 population estimates, net domestic migration estimates, and net international migration estimates. This new dataset also included the natural population change from July 1, 2019 to June 30, 2020, or the difference between births and deaths in a county during that time. This means the data covers part of last year when COVID-19 started to spread throughout the US.

Provisional National Vital Statistics System data reported by the Centers for Disease Control showed COVID-19 was the third leading cause of death in the US last year. Heart disease was the leading cause, followed by cancer.

Using the new Census data that shows births, deaths, and natural increase data for 3,143 county and county-equivalents, Insider looked at what natural population changes looked like across the nation from 2019 to 2020.

The places in red in the above map are where there were more deaths than births per 1,000 residents from July 1, 2019 to June 30, 2020, while blue counties indicate that there were more births than deaths per 1,000 residents in those places. Insider adjusted the natural increases and decreases by each county’s 2019 population.

Based on the map, more counties in the Northeast experienced natural decreases in a year, or more deaths than births, than counties that saw natural increases in this region of the US. This was also the case in the South. For instance, every county in West Virginia, with the exception of two counties, saw more deaths than births.

There were more births than deaths in many counties that make up the Western region of the US. For instance, every county in Utah, except Daggett County, saw a natural increase from 2019 to 2020.

The following table shows the 10 counties that saw the largest natural increases per 1,000 residents among counties with at least 10,000 residents in 2019:

Although Harris County, Texas, had the largest natural increase at 35,172, Madison County in Idaho had the largest natural increase when adjusting by 2019 population estimates. This county had a natural increase of 981 people, or an increase of 24.40 per 1,000 residents.

We can also look at the places that saw more deaths than births in just a year among counties with large populations. The following table shows the 10 counties that saw the largest natural decreases per 1,000 residents among counties with at least 10,000 residents in 2019:

Although Pinellas County, Florida, had the largest natural decrease at -5,893, Sumter County in Florida, had the largest natural decrease when adjusting by 2019 population estimates. This county had a natural decrease of 1,800 people, or a decrease of 13.46 per 1,000 residents.

It is important to note that the estimates released on May 4 are not the 2020 decennial census results.

“These estimates are based on the 2010 Census and were created without incorporation or consideration of the 2020 Census results,” the Census Bureau wrote about the population estimates. “They are typically used in comparisons with the 2020 Census to make determinations about the accuracy of the estimates.”

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This map shows how state finances held up better than expected during the pandemic – some much better

nyc subway
An R subway train arrives in a virtually empty Fifth Avenue station near Central Park on November 16, 2020 in New York City.

  • State finances didn’t take as big of a hit during the pandemic as expected.
  • In fact, half the states saw an increase in tax revenue, although some percent increases were small.
  • Idaho saw the largest tax collection increase between 2019 and 2020 at 12.5%.
  • See more stories on Insider’s business page.

As the coronavirus pandemic pummeled the economy starting in spring 2020, states and cities seemed increasingly vulnerable. Would they be forgotten in stimulus relief efforts? Was New York City truly dead?

But the recently enacted $1.9 trillion American Rescue Plan might provide a strong start for state and local governments, which also weren’t pummeled as hard as some feared.

In fact, a new Bank of America note anticipates “the municipal market should see a new golden decade of strong growth and strengthening credit quality.” They see a new credit cycle coming for the new decade, where “revenue for state and local governments will outgrow debt.”

The first step for ushering in this new decade came in the form of $350 billion in direct aid to state and local governments – a measure some state treasurers had been pushing for.

In places like New York City, the stimulus relief will go a long way towards bridging budget deficits and shortfalls; the city alone is set to receive $5.6 billion, according to a previous BofA note.

Infrastructure is up next as Democrats’ next big agenda item. It’s also part of BofA’s predicted boon for cities and states, as the infrastructure package “will put the muni market at the center and overall muni credit should benefit from it and remain on a path of continuous improvement over this next decade.”

Tax collection grew in Idaho in 2020, while Alaska saw a large decline

BofA is optimistic about the impact that those now well-funded – and tax-collecting – governments will have as the economy begins to improve.

“The economic boom in 2021-2030 will likely be led by rising leverage of state and local governments,” BofA wrote in the note.

Even amid the pandemic last year, tax collection grew in some parts of the nation. Based on Census data, BofA finds there was only a 1.0% decline in US state tax collection in 2020. Percent changes further vary among states.

The resilience of state finances comes after prior worries over revenues falling during the pandemic, especially as states saw “steep” drops in the first half of 2020. In a February analysis, Pew Trusts dug into the “historic state tax revenue drop,” and noted that the “unpredictability” of the pandemic made the future of revenue trends unclear.

The following map highlights the percent change in total taxes collected from 2019 to 2020 by state using quarterly state and local tax revenue data from the Census Bureau:

As the Bank of America authors noted, half the states had increases, while the other half and DC saw declines. On the one end, Idaho saw the largest year-over-year tax collection growth at 12.5%. Idaho was the only state to see a percent increase in the double digits. Some states saw minimal growth from a year earlier, including Iowa and Connecticut.

Alaska had the largest percent decline from a year earlier, where total tax collection in 2020 was 33.6% below tax collection in 2019. North Dakota has the second-largest decline at where the state collected 22.9% less than the $4.87 billion collected in 2019. Arizona had the smallest year-over-year decline at -0.6%.

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This map highlights the share of people who were born outside the US in every state

People hold signs during a rally in support of the Supreme Court's ruling in favor of the Deferred Action for Childhood Arrivals (DACA) program, in San Diego, California, on June 18, 2020.
People hold signs during a rally in support of the Supreme Court’s ruling in favor of the Deferred Action for Childhood Arrivals (DACA) program, in San Diego, California, on June 18, 2020.

  • The House is voting on two immigration bills this week.
  • The share of each state’s population who were born outside the US varies.
  • In New York, 22.4% of the population were born outside the US in 2019.
  • See more stories on Insider’s business page.

Immigration continues to be a hot topic in US politics, and as two immigration bills are being discussed in the House this week, there has also been an increase in the number of children arriving at the US-Mexico border.

As the conversation around immigration reform continues, Insider decided to look at the distribution of immigrant populations across the US. Using 2019 data on the number of residents who identified as foreign-born from the American Community Survey, the following map highlights the share of each state’s population who were born outside the US:

California has the highest share, where 26.7% of the 39.5 million people who lived there in 2019 were born outside the US. New Jersey and New York follow closely behind at 23.4% and 22.4% respectively. In contrast, 13 states have shares below 5.0%. West Virginia has the smallest share, where only 1.6% of its population was born outside of the US in 2019.

The foreign born data used includes both people who are not a US citizen and those who are naturalized citizens.

The House is voting on two immigration bills this week per the The Wall Street Journal. The bills are the Dream and Promise Act, which aims to help undocumented immigrants who came to the US as children, and the Farm Workforce Modernization Act, intended to help undocumented farmworkers. Both previously passed the House in 2019.

According to the Migration Policy Institute, 4.4 million people may benefit from the Dream and Promise Act, including Dreamers and people under Temporary Protected Status. The bill includes “conditional permanent resident status for 10 years.”

The Farm Workforce Modernization Act includes reforming the H-2A visa program and creating a way for farmers to obtain legal status.

At the same time, there has been a rise in children arriving alone at the US-Mexico border. According to CBS News, almost 3,000 of these unaccompanied children have stayed longer than the legal 72 hours in Customs and Border Protection. They are usually transferred to the Office of Refugee Resettlement after this time period, per the article.

According to The Washington Post, many unaccompanied minors are being held for longer, an average of 120 hours. According to the Associated Press, the Kay Bailey Hutchison Convention Center in Dallas, Texas, will be used temporarily as a place for thousands of teens to help with the capacity issue.

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