In a new market forecast, Grant Thornton chief economist Diane Swonk says, "housing will tread water in 2019," citing critically tight inventory and affordability, "offsetting any gains from slightly lower mortgage rates."
The lack of affordable, entry-level homes will continue to pressure the overall market, writes Swonk, and is worsening due to the rising cost of construction and the skilled labor shortage, “The escalating costs of materials have triggered production cuts; recent tariffs on imported materials, like lumber from Canada, have also pushed up costs at the same time that labor shortages have intensified,” Swonk wrote in her report. “The cheap labor - immigrants - that once made new housing affordable has all but disappeared.” Swonk adds that underbuilding is at the worst level since the 1970s recession, HousingWire reports.
Swonk is a longtime advisor to the Federal Reserve Board and a former member of both the White House’s Council of Economic Advisers and the Congressional Budget Office.
In a separate report, the Department of Housing and Urban Development and the Department of Commerce said Friday that housing starts in March fell to the slowest pace in almost two years. Residential starts slumped 0.3 percent to a 1.139 million annualized pace after a downwardly revised 1.142 million rate in the prior month.