The gulf between supply and demand of new homes continues to grow, heightening difficult conditions for first-time buyers to enter the market.
Using a metric reflecting when an individual moves out of a shared living situation, U.S. Census numbers show 12.3 million households were formed from January 2012 to June 2021. However, only 7 million single-family homes were built in that time, according to CNBC.
Research from Realtor.com reported by the outlet reveals that a gap of more than 5.2 million homes is 1.4 million higher than the same measure from 2019, when the gap was just above 3.8 million homes between forming households and constructed homes.
Construction companies were already suffering from labor shortages but faced further difficulties as the pandemic hampered labor movement and the supply chain, also causing the prices of building materials to skyrocket in some instances.
Additionally, the pandemic created more demand for homes and the report noted as supply eventually fell even further behind, builders would need to double their pace of recent production to make up the difference in the next five to six years.
The increasing gap between supply and demand has also sparked higher prices for new homes. In the first half of 2021, just 32 percent of new homes were sold at $300,000 or less. That’s down from 43 percent of new homes sold at that rate back in 2018.
Builders have been unable to keep up with the pent-up demand for homes and forced to turn to desperate measures to stay afloat. Some builders have been restricting sales to avoid being further overwhelmed, which has caused prices to balloon.
[CNBC] — Holden Walter-Warner