Millions of Americans looking to buy new homes over the coming months may find themselves disappointed. A shortage of workers, exacerbated by supply chain problems, means that some buyers might have to wait several months before moving into their new homes, despite already having put down deposits.
According to research by the National Association of Home Builders (NAHB), buyers are now waiting an average of eight months to move into new properties, up from six and a half months before the pandemic.
The housing shortage comes at the worst possible time for the U.S. market. Since the beginning of 2021, demand for properties has surged as more Americans worked from home. Prices are now some 20 percent higher than they were before COVID-19 hit. This is primarily as a result of changes in lifestyles and additional credit in the financial system.
The problems with the new construction of homes
It’s not just a lack of labor, though, causing issues in the sector. According to contractors, there are supply shortages across the board. Lumber, cabinetry, roofing parts, electricals, and appliances are all in short supply because of supply chain issues of one kind or another.
Research by the NAHB found that lack of materials was the most serious since 1990 when the organization began tracking such issues. More than 90 percent of developers across the U.S. now report that the number of lots available to purchase is either “low” or “very low.”
Pundit had expected supply issues to resolve last year. However, due to ongoing lockdowns in China and the now-fragmented nature of the global international trade system, things aren’t improving as fast as many expected. Ships still aren’t leaving major ports in East Asia at the rate they did before the pandemic, heightening an already difficult domestic situation.
Materials shortage and inflation
A shortage of materials is contributing to the current sky-high rates of inflation in the U.S. and across much of the developed world. According to the U.S. Census Bureau, permits for new construction in the country hit a five-month low in June. This is despite record demand. Supply shortages threaten to push home prices even higher, by more than 15.5 percent, to an average of $424,000 by the end of 2022.
Housing shortfall to decline
The housing shortfall is also expected to decline. Moody’s analytics branch believes that the U.S. needs around two million new homes to meet demand. However, owing to trouble in the construction sector and uncertainty about future house prices, many are not getting built.
Housing is a major source of inflation
Housing is currently a major source of U.S. inflation, commentators say. The shortage is pushing up both rents and asking prices at a time when supply and demand factors are working to push up rates.
Over 280,000 homes are currently under construction
According to U.S. Census data, there are around 281,000 homes currently under construction across the country. Around half that number are up for sale, but not currently under construction. Only a small percentage of homes are actually available for people to move in (around 38,000). This means that there is fierce competition for these properties. Furthermore, it doesn’t look like things are going to change any time soon.
