Housing Starts Not Keeping Up with Demand
Although the U.S. now has a healthy economy, incomes are on the rise, and growth in household formations has finally started to normalize, the housing industry cannot keep up.
This is the fourth factoid in a series of five factoids detailing slow-to-grow housing starts, low inventories, and rising mortgages and rents.
Labor shortages and the rising cost of land and materials has led to housing being built primarily for the higher end of the market. At a time when Millennials are fully entering their home buying years, many are being locked out – not boding well for the furniture industry.
While higher interest rates and rising home prices have led to a slightly increased housing inventory in recent years, inventory levels remain historically low. In this tight housing market, affordability continues to be a challenge for both renters and first-time buyers.
Low home inventories have brought correspondingly low vacancy rates. The vacancy rate among homeowners has dropped each year since 2010 to 1.4 percent this year. Meanwhile, rental vacancies have hovered around 7 percent for the last four years.
Source: U.S. Census Bureau, Current Population Survey and Housing/ Vacancy Survey