January 22, 2020
Homebuyers in the market for a new home in 2020 are facing extremely low inventory, according to a recent analysis by realtor.com. According to the company, the 5.9 million single family homes built between 2012 and 2019 are not enough to offset the nearly 10 million new households formed in that time.
Single family home starts per 1,000 households grew from 4.6 in 2012 to 7.3 in 2019. While that growth was needed, levels remain well below the two-decade average, according to realtor.com. The company’s economists reported that even with above average pace of construction, it would take homebuilders four to five years to get back on track.
“New home starts are not keeping pace with demand,” said Javier Vivas, director of economic research at realtor.com. “Homebuilders have a mountain of opportunity, but a big hill to climb. The current inventory crisis and the need for 3.8 million new homes means a nearly insatiable appetite from potential buyers, especially in the lower end of the market.”
But the outlook isn’t all negative. Realtor.com reports that heading into the new decade, growing demographics and strong economic fundamentals should continue to underpin home builder confidence. Well qualified buyers with strong incomes are waiting the chance to buy, assuming the economy avoids a full recession and rates remain low for the foreseeable future.
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