With existing home inventory low, there are economic incentives to build more
With existing home inventory low, there are economic incentives to build more
There’s been a slew of data about the housing market this week.
Data point one: The National Association of Realtors said this week that existing home sales in June were down about 19% from last year. It’s not that people don’t want to buy — it’s that people with homes aren’t selling. And that makes new construction all the more important.
Data point two: The number of permits to build new single-family homes rose in June to the highest it’s been in 12 months, according to recent data from the U. S. Census bureau.
Wake County, North Carolina, is hot right now (like plenty of other places in the country.) Literally, it was in the low 90s on Friday, but metaphorically too, with county data showing that approximately 62 people are moving there every day.
“Think about that, that’s a day,” said Sheryl Merritt, laughing. She owns a real estate firm in the area, so it’s her job to help those newcomers find homes. And it’s been challenging with inventory on the low side.
This is a problem all over the country. But with home prices high, Lawrence Yun, chief economist at the National Association of Realtors, expects there to be plenty of new construction.
“Builders are building more. I think they will continue to build more given that there is a financial incentive,” he said.
Plus, there’s scarcity, said Daryl Fairweather, chief economist at the real estate brokerage Redfin.
“There is a real dearth of supply,” she said. “We built fewer homes in the 2010s than in any decade, going all the way back to the 1960s.”
But, she warns that “it’s going to take decades of building, not just one good year, for the market to come back into a healthy place.”
Back in North Carolina, real estate agent Sheryl Merritt is counting on interest rates ticking back down. She thinks that will encourage more people to sell their homes because they’ll feel they can afford to trade up.
“It’s amazing how these little fluctuations give people hope to where they come back in the market,” she said.
And that’s essential for more people to buy a home — and realize the American dream.
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