Housing Industry Dilemma Housing Inventories

December 7, 2018  by Laurie Northington in General   

The furniture industry is driven by housing: new household formations, changes of residences of existing households, and replacement or upgraded furniture within existing residences.  Unfortunately, critically low inventories and subsequent skyrocketing home prices and rental rates are locking out new home buyers and stymieing moves at a time when the economy is growing and employment is high. This is the second factoid in a series of four factoids detailing the crucial struggle facing the housing market and consequentially the furniture industry.

The most critical result of the lack of new housing starts is falling housing inventories which in turn drive up prices.  The number of rentals and homes for sale has been falling consistently since coming out of the recession when inventories were high. During the four-year period 2010 to 2014, rental inventories fell at an annual rate (CAGR) of 7.5 percent and housing for-sale inventories declined 10.2 percent. During the following three years, 2014 to 2017, rentals and housing inventories fell again but at a smaller annual rate of 0.4 percent and 4.8 percent respectively.  This year, based on an annualized first quarter, rental inventories are down another 3.4 percent and houses for sale have declined 7.2 percent.

Source: U.S. Census Bureau, Current Population Survey/ Housing Vacancy Survey