It’s slim pickings out there for buyers as the supply of homes reaches near record lows, and the disparities between demand and supply are only increasing. New research finds the country is short 5.24 million homes, up 1.4 million from 2019’s shortage of 3.84 million homes. From 2012 to 2021, 12.3 million American households were formed but the single-family home supply only increased by 7 million. CNBC says new household formation is slower than in years past, but builders would need to double their home production to close the housing gap in five to six years.
“The pandemic has certainly exacerbated the U.S. housing shortage, but data shows household formations outpaced new construction long before Covid. Put simply, new construction supply hasn’t been meeting demand over the last five years,” said Realtor.com chief economist Danielle Hale. “Millennials, many of whom are now in their 30s and even 40s, have debunked the industry’s ‘renter generation’ expectations.”
Household formation is when an individual moves out of a shared living situation.
Single-family home construction has been rising steadily since it bottomed in 2009 during the Great Recession. It is still not as high as it was just before the housing boom and is actually running at the slowest pace since 1995, according to the U.S. Census. The slower pace comes as the largest generation enters its typical homebuying years.
PulteGroup, one of the nation’s largest homebuilders, just lowered its Q3 and full-year guidance for home closings, citing supply chain disruptions.
“Despite the extraordinary efforts of our trade partners, the supply chain issues that have plagued the industry throughout the pandemic have increased during the second half of the year,” Pulte CEO Ryan Marshall said in a release. “We continue to work closely with our suppliers, but shortages for a variety of building products, combined with increased production volumes across the homebuilding industry, are directly impacting our ability to get homes closed to our level of quality over the remainder of 2021.”