NAR Report Shows Housing Costs Soaring, Shortage of New Construction
Anytime a new report from President’s Biden’s administration is released, something is inherently wrong. Figures are showing new problems as being worse than we thought. It’s not that the man cannot catch a break, it’s that he refuses to take the steps to do the right things for the country, and also give himself one.
The June jobs report from the Bureau of Labor Statistics (BLS) was recently released and it’s a bit of a doozy. While the report shows a net increase in jobs, it’s the slowing of construction that worries many, including the National Association of Realtors’ (NAR) chief economist. With an increase of only 13,000 construction jobs in June, this figure represents a loss of one-half the construction job creation that was generated in May. According to the chief, this could exponentially slow further construction jobs and have a ripple effect on housing prices.
NAR’s economist, Lawrence Yun, says that housing costs have been soaring, both to buy and to rent. This is a consequence of multiple years of underproduction of new housing units. To relieve shortages, we need more construction of homes. The fact that there appear to be some job cuts in residential construction and contracting jobs is not the trend we want to observe. We need to build more by hiring more, says Yun.
Yun also worries about the mortgage rates soaring once again. “It means the direction of interest rates will be higher. Home sales have been coming down this year, back to pre-pandemic levels after the gangbuster performance of the past two years, due to a steep fall in housing affordability. Alleviating the housing shortage therefore will help with affordability.
For many Americans, the breathing room they hoped to see coming to their housing market due to the interest rate hikes has not happened yet. Even with 5.75 percent or higher rates, people are still buying homes left and right. The problem is that these buyers are cash buyers. People who either sold their last house for well over the purchase price of their new home, or investors who have the disposable cash to buy a house and not worry too much about the price. They are also able to make much more attractive offers than a traditional mortgage shopper.
It’s a pretty tough time to be a first-time homebuyer now. The relocation of remote employees from major cities to smaller towns across rural America is making it much more difficult as well.
The opportunity to experience homeownership has been a part of the American dream for decades. From World War I to today, people have always seen the white picket fence, 2.3 kids, and a black lab as a part of the American dream. It’s the Saturday morning cartoon of Americana that survived the hippie 70s, and the indulge to excess in the 80s.