Since the start of the COVID-19 pandemic, we’ve watched housing prices rise and speculated on their return to normal. Were we in a housing bubble reminiscent of the one in 2008? When was the crash coming, or would there be one at all?
As prices increased and diminished inventory continued as a result of supply chain delays, many real estate professionals slowly came to realize, and agree, that we were in fact not in a bubble about to burst. These all-time highs were here to stay… at least for now, and a return to normal would be more of an ebbing wave and less of a sudden crash.
It’s clear, we are facing an inventory shortage across the country and it’s the biggest culprit contributing to sky-high prices. So, when will inventory levels return to normal so home prices can follow? It’s important to examine recent new-home construction data first, so let’s take a look.
New Homes Are Authorized, but Breaking Ground Has Been Slow
Over the past year, Census.gov has tracked a turbulent month-by-month survey of new housing starts. November’s total privately-owned new housing starts reached a seven-month peak at 1.679 million, an 11.8 percent increase from October’s 1.502 million housing starts. This includes 273,000 homes that were authorized, but not started. The same month’s privately-owned completed units were the highest they’ve been in three months at 1.282 million in total. Meanwhile, the total number of active listings for sale remained at an all-time low according to Redfin. Overall, housing starts are increasing, but the number of completed homes every month, while slowly getting better, is still remaining lower than needed for the level of demand.
It’s not just a lack of new homes being completed that is causing fewer homes to hit the market either. Many homeowners that are interested in selling simply don’t want to put their properties on the market because it also means becoming a buyer that would need to compete with over-asking-price bids and a lack of inventory. It’s important to note that many industry thought leaders hold the opinion that new home constructions won’t see much of an improvement in 2022. Why? It’s simply unclear when supply chain delays and labor issues will subside.
So, what do you think? Will new construction bounce back or continue its lackluster pace?
One thing is for sure, if you’re looking for fresh, trustworthy data to help you analyze your current market, we have plenty of options to choose from. Gain critical insight into nationwide building permit data and access listing information to view market trends and buyer behavior. Then, when you’ve had your fill of current market data, circle back around with one of our data specialists to discuss year-end reports (Loan Originator and Mortgage MarketShare reports to be specific) and how they can help your team identify patterns you could be facing in your target market in the coming months.