WASHINGTON – As of July, national housing inventory declined 32.6 percent year over year, and the inventory of newly listed properties declined 13.4 percent.
Real Estate Center Chief Economist Dr. Jim Gaines expects existing-home inventory for sale to remain tight and may get even more constrained because of limited incentives for current owners to move.
"Baby boomers, a primary homeowner group, continue to age in place, contrary to previous expectations," Dr. Gaines told Money. "Current economic/pandemic effects have significantly reduced labor mobility. Households are not moving based on job transfers, changing jobs or even finding new jobs. Work from home is the new employment base.
"Equally important, boomers and non-boomers alike are refinancing in large numbers at historically low mortgage interest rates, significantly reducing the incentive to move. And, even for 'move over' households that might want to sell and buy something else, the circular effect of a limited inventory means not being able to find a suitable replacement property at the desired price."
Dr. Gaines also says homebuilders have been unable to keep pace with the increasing number of new households for years.
According to the Center's latest Texas Housing Insight, a dwindling supply of active listings and a resurgence in home sales pulled Texas' months of inventory down to an all-time low of 2.8 months in June.
While Texas housing starts rebounded over the month in June, new construction is still on a downward trajectory.
"The pandemic created a temporary slowdown in construction activity, but recent data suggest housing starts will start coming back," said Gaines. "Even so, it likely will not be enough to satisfy the demand.
"New-home construction faces several headwinds, including local zoning and other regulatory obstacles that increase cost or significantly constrain new development, land and land development costs, and especially cutbacks by community and regional banks funding acquisition and development construction activity."
Gaines concluded, "the short-term limitation of construction labor due to COVID-19 should be overcome, but will take time."
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