New Home Construction Continues to Fall Behind
The construction sector and US labor markets are going strong, but, according to the National Association of Realtors, new home construction is lagging behind in many metro areas, leading to housing shortages and price rises. Comparing the volume of new single- and multifamily home construction to the number of newly employed workers in 146 US metropolitan areas from 2012 to 2014, the NAR found that homebuilding activity is underperforming in two-thirds of the measured areas. NAR chief economist Lawrence Yun (pictured) says low inventory has been common in the recent housing market, since low turnover rates and fewer distressed properties leave little room for new home construction, especially in the single-family markets. Through 2014, 63% of measured markets had an average ratio for the annual change in workers to total permits above the historical average (1.2%). And with more jobs in these markets and increased challenges for homebuilders (rising labor and construction costs and limited credit availability), the disparity between housing and employment may only grow larger and—as seen in San Francisco, San Diego and New York—affordability issues will become much more prominent. [WPJ]
