Still Building: House Shortage Will Be With Us For Years to Come
The U.S. is short more than 2 million homes as building activity still lags.
Nationwide home mortgage rates are near record lows. Employment rates are near record highs. And demand for housing is strong in most U.S. metro areas.
You'd think homebuilding would be booming. But you'd be wrong. Single-family home construction across the country and in North Texas is nowhere close to reaching the levels we saw before the Great Recession. And homebuilding is likely to lag demand through the next three years, according to a new report by Zillow.
The real estate marketing firm and Pulsenomics surveyed economists, investment strategists and real estate professionals who said that home construction will remain below historic averages through at least 2022. Zillow estimates that nationwide homebuilding has lagged by more than 2 million houses during the last decade.
In the Dallas-Fort Worth area, we're short more than 40,000 homes from where we would have been if builders could have kept up with demand. "Without new homes to meet population growth and replace an aging housing stock, homebuying is expected to move further out of reach," Zillow director of economic research Skylar Olsen said in the report. Zillow's findings are in line with what the National Association of Home Builders has been warning for the last few years — that builders can't produce enough houses. "Our forecast goes through 2021, and we have single-family starts approaching 900,000 units by the end of the forecast window — so staying under 1 million a year," said Robert Dietz, the association's chief economist. "On a demographic, or potential demand basis, we should be building 1 million to 1.1 million single-family homes a year. "You need about 300,000 for replacement homes and second homes, and another 800,000 or so for population growth." Dietz said labor shortages, high land costs, price increases for materials and growing government regulations have hammered housing construction in many markets. "This has left a deficit for the single-family housing stock, which means home price growth has been outpacing income growth during this expansion," he said.
In North Texas, the country's busiest homebuilding market, production for this cycle may have already peaked. Home starts in the area are down about 2,000 units this year from last year's peak, according to data from Residential Strategies.
While homebuilding activity may catch up a bit, don't expect a D-FW building surge, Residential Strategies principal Ted Wilson said...
