The scarcity of homes for sale in the United States, which has escalated to historic levels during the pandemic, is unlikely to be resolved anytime soon, experts say.
Housing inventories could take years to recover from current record lows, experts told US News & World Report, citing supply chain difficulties and the lasting fallout from the 2008 financial crisis, as well as an influx of millennial shoppers into the market.
Fewer than a million homes were available for sale in the United States for much of last year, and inventory hit a low of 753,000 in December, a TRD Zillow’s data analysis showed this. Active listings were down 22% year over year as of mid-April, according to the National Association of Realtors.
Supply chain challenges have plagued the economy, and labor and supply shortages have driven up costs and extended construction times, making it difficult for homebuilders to respond on demand. While housing starts rose 22.3% year-over-year in February, according to the US Census Bureau, completions of those already underway declined over the same period.
“We need to get this supply chain moving,” said Lisa Kneepresident of EisnerAmper’s real estate services, told US News.
Housing starts slowed after the 2008 financial crisis, from 1.3 million in 2007 to 554,000 in 2009. This annual figure only exceeded 1 million in 2014, despite 1.5 million housing starts per year in the 1980s and 1990s.
“There really haven’t been enough houses built since the housing crisis,” Knee added, referring to the 2008 crash.
Millennials are also reducing inventory as the millennial buy-in to buying a home further increases demand. More than 4 in 10 homebuyers are now millennials, according to an NAR report cited by the publication.
As the warm market drives away many potential buyers, tight inventory continues to help sellers get the best price for their homes. Rising interest rates could offset that, but it’s unclear if that’ll be enough to halt the rise in the median home price, which posted another double-digit annual increase in February.
It will probably take “about four years” before the market starts to normalize, Jeff Taylormanaging director of mortgage technology company Mphasis Digital Risk, told the publication.
[U.S. News & World Report] — HoldenWalter Warner