Aspiring homeowners continue to be frustrated at the lack of supply and low demand. New reports suggest the declining price of lumber following a year of surging demand and prices could be short-lived. According to the National Association of Realtors, far too few homes have been built for the amount of people looking to purchase.
Following decades of underbuilding and underinvestment, “the situation is dire,” the report states. The shortage of available homes that are affordable to our nation’s population is chronic. With a severe lack of new construction both thanks to expensive lumber and record numbers of people looking to adjust their way of life thanks to the pandemic, the housing stock around the country has been neglected.
“The scale of underbuilding and the existing demand-supply gap is enormous and will require a major national commitment to build more housing of all types by expanding resources, addressing barrier to new development and making new housing construction an integral part of a national infrastructure strategy,” said the report.
On average, the U.S. has built 267,000 fewer homes per year in the past 20 years compared to the years between 1968 to 2000. That about 5.5 million units short of the long-term historical levels, according to the NAR report. The report is calling for a “once-in-a-generation” policy response. To make up the shortage, NAR says the U.S. needs to build over 2 million homes every year for a decade. This would be more than the country built every year during the mid-2000s housing boom.
Data released last week by the federal government’s report on new residential construction, showed little progress toward mitigating the shortage. Between April and May, new permits for building fell 3%. Builders started on 3.6% more new homes than the month prior according to that report.
The shortage in supply isn’t limited to new homes. According to a report released by Harvard University’s Joint Center for Housing Studies, there are fewer existing homes up for sale too.
“We’ll need to do something dramatic to close this gap,” said Lawrence Yun, NAR’s chief economist. The realtor association proposed increasing the housing supply by creating tax credits or expanding those already in place. They also presented ideas of loans or grants for builders who renovate or build new housing in low-income areas. The same proposition would include builders who convert old malls and factories into homes. They also asked for incentives for cities to allow denser zoning. According to Reuters, this was something President Biden included in his infrastructure proposal.
You can read the full report from the National Association of Realtors here.