Friday, October 15, 2021

US faces shortage of over 5 million homes amid surge in demand and lack of construction: Report

There is a shortage of more than 5 million homes in the United States, according to new research from Realtor.com, driven by increased demand for housing across the country and a shortage of materials and workers in the construction industry.

Data released on September 9 shows that there is a deficit of 5.24 million homes in the United States, an increase of 1.4 million from a difference of 3.84 million in 2019 according to the US Census.

Between 2012 and June 2021, 12.3 million US homes were formed, but only 7.5 million single-family homes were started, and 7 million single-family homes were completed during the same period.

The report said that if domestic manufacturing continues at the current five-year average, within five to six years, domestic manufacturing will have to triple production to bridge the gap.

However, if home construction continues at the same pace while home construction grows, it will only take five to six years to bridge the gap between the two.

Construction companies were already suffering from labor shortages well before the COVID-19 pandemic began, but have since been plagued by issues surrounding supply chain management, with contractors unable to source basic materials , and skyrocketing prices of building materials, all of which further exacerbated that pre-existing shortage.

The situation made builders unable to build more houses amid rising costs.

Meanwhile, housing demand surged amid the pandemic, which the Federal Reserve notes could be down to factors like lower interest rates, homeowners reluctant to put their homes up for sale, and generous mortgage relief programs. Allow homeowners to withhold or reduce their payments, among others.

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Realtor.com found that the widening gap between supply and demand has led to higher prices for new homes, with a lower percentage of affordable homes being built and sold in 2021 compared to 2018 to 2020.

Just 32 percent of new homes were sold for $300,000 or less in the first half of 2021, down from 43 percent in 2018.

“The pandemic has certainly exacerbated the US housing shortage, but data shows that home construction outpaced new construction long before COVID. Simply put, new construction supply has not been meeting demand over the past five years,” Danielle Hale, chief economist at Realtor.com, told CNBC.

“Millennials, many of whom are now in their 30s and even 40s, have defied the expectations of the industry’s ‘renter generation’,” he said.

While the report shows a significant reduction in housing, it noted that overall, the market for potential home buyers, builders and sellers still looks relatively strong.

In addition, the low rate of home construction so far in 2021 is also giving builders time to catch up to the growing demand for homes, allowing them to potentially close the gap between construction and construction, meaning That housing shortage may soon begin to decline.

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This News Originally From – The Epoch Times

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