Drop in New Listings Reveal Inventory Shortage
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The housing industry appears to be the only silver lining in an otherwise hampered broader economy. The squeezed inventory could however start affecting real estate shortly. While the new-home sales rose by 8.3% annually in August, new-home listings dropped by 4.1%, says Redfin. The fall in listings was 3.8% in July.
Daryl Fairweather, Redfin’s Chief Economist, stated in a report that “There’s plenty of demand for new homes, but builders are facing a unique and costly set of hurdles as they attempt to satisfy that demand. Listings of new homes aren’t bouncing back as quickly as listings of existing homes because, unlike individual homeowners, construction companies have to deal with lumber and labor shortages during the pandemic. They’re also competing for labor and materials with folks who are renovating their houses during quarantine. The lack of new listings is keeping builders from reaching their full potential in terms of home-sales growth.”
Supply of new constructions came down by 33.6% annually. This is the biggest yearly fall since 2013; the year Redfin had started tracking data. High demand and cramped inventory is a perfect recipe for a price hike. The median sales prices, as expected, have come up 4.1% in August to $378,000.
Chuck Fowke, NAHB Chairman, stated in a release that the “Historic traffic numbers have builders seeing positive market conditions, but many in the industry are worried about rising costs and delays for building materials, especially lumber. More domestic lumber production or tariff relief is needed to avoid a slowdown in the market in the coming months.”
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