The number of homes completed in May does not paint a pretty picture for the coming months.
While many people who are looking to sell a home in today’s housing market are probably dancing a little jig in most markets, those who are looking to buy are probably not quite so ebullient. The housing shortage, which has been driving up prices for months on end now, doesn’t show any signs of letting up anytime soon, as the pace of new home construction continues to lag behind surging demand, realtor.com reports.
May saw only 81,100 new homes completed, a 3.3 percent drop from May 2015’s total of 83,900. Even the good news, the fact that the rate of new home construction actually increased from April, has a caveat attached to it; much of the increase can be attributed to seasonal factors as construction tends to peak during warmer summer months.
According to Jonathan Smoke, chief economist at Realtor.com, the country is actually about 500,000 homes short of where it should be to keep up with population growth. Over the next few months, the amount of people searching for a new home should outpace the amount of homes available even further, resulting in prices that continue to creep to cartoonish-double-take levels. Only 107,800 permits were issued in May 2016, a 3.7 percent drop from one year prior.
The South continued to lead the way in new construction with around 43,800 new homes going up, followed by the West (19,000), the Midwest (13,400), and the Northeast (5,000).