by: Sam Sachs
Posted: / Updated:
TAMPA, Fla. (WFLA) — Housing has become a buyer’s market, at least for now. The short-term ramifications of the record-low housing inventory across the U.S. means that for families and workers trying to move, places to go are in short supply. To address the demand of movers compared to home availability, companies are building, and building, and building.
According to data from real estate company Redfin, more than one-third of all U.S. homes sold in December 2021 were new construction. The number of new homes sold rose from 25.4% to 34.1%, which Redfin says is a record-high.
Despite the influx of newly built homes, and their quick sales, Redfin said the overall housing inventory in the U.S. had dropped to a record low, with the number of existing homes for sale falling 14.2%, compared to the previous year. Inventory of new homes was up 34.8%, but overall there was a record-low for 1.8 months supply, according to the company.
Part of the issue is ongoing concerns with inflation, and how it’s hurting the ability to bring in supplies for construction, especially lumber. According to December’s data from the Bureau of Labor Statistics, the Producer Price Index showed prices were up 24.4% for softwood lumber. That price increase was just one month’s climb, from November to December 2021. The latest price increases in January 2022 will be announced by the BLS on Feb. 15.
While the housing market is a boon to sellers right now, the real victims of the housing market are the buyers and renters. Seasonally-adjusted, Redfin reported home sales in December were down 3.6% month-to-month, but down 11% from the year before.
The strapped inventory of available homes is unable to keep up with demand, and construction is a process that normally takes months. Accounting for supply chain shortages and delays, that process could be even longer.
As more companies buy homes to turn into rental properties, rent prices across the U.S. have gone up. While it’s not the only cause, the purchase price to flip a property into a rental does play a part in the increased monthly cost for renters.
While prices continue to climb and the housing market continues to show inventory shrink, the U.S. Census and U.S. Department of Housing and Urban Development reported the number of new residential constructions at the end of 2021 had only increased 2% from November to December. Still, that was a 17.2% increase from the year before, as the country adjusted to the COVID-19 pandemic. Updated data for construction of residential property in the U.S. is expected to come on Feb. 17.
According to the Census, the U.S. spent $810.3 billion on residential construction as of December, with the majority of spending paid by private companies, not public. Spending in 2021 was also 23.2% higher than in 2020, according to the same data. Overall, the Census found a 0.2% increase in total construction activity and spending in December, and residential sales up 11.9% for single-family houses.
At the same time, the U.S. Census will release new statistics on the country’s homeownership rates on Feb. 2, showing how much of the U.S. own their homes, what the current national rental vacancy rate is, and how many homes in the national inventory are available, but unclaimed. Right now, only 65.4% of U.S. homes are owned.
Jobs are continuing to come to the Tampa-St. Petersburg-Clearwater metro area, according to the National Association of Realtors, to the tune of 30.1% in job net gains, even with lower home inventory and higher inflation in the area compared to the rest of the U.S.
The question remains: Where will they live as the housing inventory continues to decline?