Seattle Among Markets That Badly Need a Jolt of New Housing
There aren't enough new single-family homes being built in the U.S. Eighty percent of metro areas recently analyzed are faced with a “housing shortage crisis,” according to new research from the National Association of REALTORS®.
NAR reviewed new-home construction relative to job gains over a three-year period, from 2013 to 2015, in 171 metro areas. Markets in the West made up half of the top 10 areas with the largest shortages of newly built homes, NAR’s study shows.
The NAR analysis comes just as the Census Bureau released data on housing starts for August. On September 20, the bureau reported a drop in building permits for August 2016, compared with both July 2016 and August 2015. Housing starts were also down for the month but slightly above the August 2015 rate. In July, both housing starts and residential building permits showed a year-over-year gain. But the increase isn't sufficient to meet demand, says Lawrence Yun, NAR’s chief economist.
Inadequate single-family home construction since the Great Recession has had a detrimental impact on the housing market by accelerating price growth and making it very difficult for prospective buyers to find an affordable home – especially young adults,” says Yun. “Without the expected pick-up in building as job gains rose in recent years, new and existing inventory has shrunk, prices have shot up, and affordability has eroded despite mortgage rates at or near historic lows.”
Looking at the historical jobs-to-building permits ratio, the NAR research team identified the follow markets as having the greatest need for more single-family housing starts:
“The limited number of listings in several markets means that many available homes are receiving multiple offers and going under contract rather quickly,” says NAR President Tom Salomone. That's putting the squeeze on buyers.
Yun says the jobs-to-permit ratio in many areas improved in 2015 compared with 2014 as builders started to respond more quickly to local supply shortages. Nevertheless, “it’ll likely be multiple years before inventory rebounds in many of the markets because homebuilders continue to face hurdles," NAR stated in a Sept. 19 release. The released cited permit delays; high construction, regulatory and labor costs; difficult finding skilled workers; and the difficulty small builders have obtaining financing.
A mix of new starter homes for first-time buyers and larger homes for families looking to trade up is needed “to ensure home ownership opportunities remain in reach to qualified prospective buyers at all ages and income levels,” Yun says.