But newly built homes can’t bridge the supply gap we’re facing right now on their own. We’re already starting to see an increase in new home construction, which is great news. Does that mean today’s ultimate sellers’ market is here to stay? That means if we build even more new houses than the norm every year, it’ll still take a decade to close the underbuilding gap contributing to today’s supply-and-demand mix. “Looking ahead, in order to fill an underbuilding gap of approximately 5.5 million housing units during the next 10 years, while accounting for historical growth, new construction would need to accelerate to a pace that is well above the current trend, to more than 2 million housing units per year.” totaled more than 5.5 million housing units in the last 20 years.” However, since the housing bubble in 2008, the level of new home construction has fallen off ( see graph below): The same NAR report elaborates on the impact of this below-average pace of construction: Historically, builders completed an average of 1.5 million new housing units per year. New home construction has been lagging behind the norm for quite some time.
NEW HOME INVENTORY DRIVER
“The main driver of the housing shortfall has been the long-term decline in the construction of single-family homes.”ĭata in a recent report from the National Association of Realtors (NAR) tells the same story. According to Sam Khater, VP and Chief Economist at Freddie Mac: Our low supply goes hand-in-hand with the number of new homes built over the past decades. Let’s take a look at the root cause and what the future holds to uncover why now is still a great time to sell. While it did make some sellers hold off on listing their houses over the past year, the truth is the low supply of homes was years in the making. While it may be tempting to blame the pandemic for the current inventory shortage, the pandemic can’t take all the credit. But as life begins to return to normal, you may be wondering if that’s something that will change. It means your house will get more attention, and likely, more offers. As a seller, you’ve likely heard that low supply is good news for you. Simply put, there are many more potential buyers than there are homes for sale. One of the hottest topics of conversation in today’s real estate market is the shortage of available homes.
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