NAR Housing Data
The latest data released by the National Association of Realtors® (NAR) indicates that new housing starts are still lagging behind in terms of what the market needs.
NAR data shows that the latest annualized pace of 999,000 new housing units is still insufficient to “satisfy demand,” and another 50 percent increase in housing starts is needed to help relieve the current inventory shortage, this despite the fact that new home construction reached the 3rdhighest level in the past 66 months.
The latest figure for December was a decline from the previous month, which was the best in over 5 years. However, last months numbers were still higher than a year ago. Both single-family and multifamily housing starts softened last month.
Housing inventory of newly constructed homes is essentially at a 50-year low, says the NAR, and they say much more construction is need. The availability of credit is a prime problem with the lagging inventory. The NAR explains that larger “publicly-listed companies like KB Homes and Toll Brothers can tap Wall Street funds to get busy. However, small local builders have historically been the principal supplier of new homes in America. These local homebuilders rely on construction loans, which are very hard to get. Many local lenders have indicated the burdensome regulation arising from Dodd-Frank financial market regulations have hindered their ability to lend. Hence, large companies are getting bigger at the expense of smaller guys getting shut out.”
Normally, for a single-family home, it is about 6 months between beginning as a housing start to housing completion and being ready for sale.
As a consequence of the restrictions on credit to the smaller local builders, the insufficient number of new housing starts will probably mean a continuation of the shortage of housing inventory for the rest of this year, therefore, home prices and rents will rise in nearly all local markets in 2014, says the NAR.