Housing starts have declined 14 percent since the end of 2016, and that’s adding to the nationwide inventory shortage, according to Freddie Mac’s monthly Outlook for July.
Despite the inventory shortage, Freddie Mac predicts the housing market will continue to grow throughout the rest of the year.
“A decade after the Great Recession, the housing market is rebounding. House prices today are higher than they were at the peak in the summer of 2006, near-record-low mortgage rates have boosted housing demand, and sales volume is robust,” Freddie Mac Chief Economist Sean Becketti said in a release.
“The spoiler is the lean inventory of houses for sale. Nationally, just over five months of supply is for sale and hot markets are much tighter than the national average,” Becketti added. “So far, residential construction is not doing much to fill the gap.”
Freddie Mac’s July Outlook also noted:
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The number of open construction jobs has been on the rise since the recession. As of May 2017, the number of open construction sector jobs stood at 154,000. The current labor shortage can be attributed to skilled workers not returning to construction after the recession, a difficulty attracting millennial workers, and the increases in the enforcement of immigration laws.
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Housing starts will remain well below their long run average ending the year around 1.27 million.
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Despite house price growth that's expected to be above 6 percent for the year, house demand remains strong. Low mortgage rates are helping to fuel strong housing demand and are expected to stay around 4 percent for the rest of the year.