The prolonged weakness in homebuilding is likely the result of land and labor shortages, as well as expensive building materials. A survey on Tuesday showed that though builders reported strong demand for new homes, they continued to highlight "affordability concerns stemming from a chronic shortage of construction workers and buildable lots."

These factors are constraining builders' ability to construct homes in the lower price segment of the market, which continues to experience a shortage of homes for sale. The housing market hit a soft patch last year, with investment in homebuilding contracting 0.3 percent, the weakest performance since 2010.

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