After enduring several challenges in recent years, the real estate industry now confronts a formidable obstacle: a shortage in housing inventory. During an appearance on “Mornings with Maria,” Realtor.com chief economist Danielle Hale emphasized the magnitude of the issue, stating, “We’ve got a big hole to dig out of.”
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Discussing the current state of new home construction, Hale revealed, “We do expect to see single-family construction tick up next year by about 0.4%. So not a huge gain, but construction right now is on the upper end of what we’ve seen it do over the last, really since 2012.” Despite this modest increase, she remains optimistic about the new unit inventory, acknowledging that it will be a “multiyear problem” to address the existing deficit.
“While we anticipate improvement in the coming years, it’s going to take us a few years to build out,” Hale explained, highlighting the time required to overcome the housing shortage.
The impact of this shortage extends to prospective homebuyers, particularly first-time buyers, for whom the dream of homeownership becomes increasingly elusive. According to Hale, October data indicated that listing prices remained flat, with home prices wavering in recent months.
Builder confidence in the U.S. housing market experienced a third consecutive month of decline in October, attributed to rising mortgage rates dampening consumer demand for new homes. Hale anticipates a more consistent decline in home prices starting in 2024, projecting a 1.7% decrease for the year.
Regrettably, the challenges in the real estate sector aren’t exclusive to homebuyers. Those opting to rent may find little relief, as Hale noted, “Relative to high costs in the housing market, I think renting is going to be an option for many families who are trying to figure out how do I save on housing costs.” She emphasized the limited avenues for cost savings in the current housing market, stressing the ongoing difficulties faced by various demographics in the real estate sector.
