The scarcity of properties that plagued the housing market long before Covid-19 struck the U.S. likely will outlast other pandemic shortages, according to Goldman Sachs economists.
While the supply-chain disruptions impacting the availability of appliances, used cars and computer chips will ease as the pandemic ebbs, real estate won’t be so lucky, the report said.
“Of all the shortages afflicting the US economy, the housing shortage might last the longest,” the economists, led by Goldman Sachs Chief Economist Jan Hatzius, said in the report earlier this month. “While the supply of homes for sale has increased modestly since the spring, it remains well below pre-pandemic levels and the outlook offers no quick fixes for the shortage.”
The headwinds facing homebuilders trying to expand inventory with new houses include shortages of lots, labor and building materials, the report said.
Years of underbuilding in the wake of the 2008 financial crisis has left the market with a dearth of about 5.2 million single-family homes, according to a report last month from Realtor.com.
The lack of new houses has increased competition in the existing-home market. Housing economists use a gauge called “months supply” to measure inventory. It’s an estimate of how long it would take to sell all the properties listed if nothing else came on the market. In a balanced market, it’s typically close to 6 months.
The latest data, for September, showed the months supply at 2.6, the lowest level ever recorded for the month, according to data released last week by the National Association of Realtors.
Some relief is on the way, according to NAR’s housing forecast. Ground-breakings for single-family homes, known as housing starts, likely will total 1.15 million this year, surpassing the 1 million mark for the first time since 2007.
It would be a gain of 15% from 2020, according to Commerce Department data. But, it won’t be enough to satisfy the demand for properties boosted by a Federal Reserve bondbuying program that has kept mortgage rates near 3% since last year.
“Homebuilders continue to face headwinds that were present before the pandemic – especially a lack of construction workers and a lack of available plots to build on – and the pandemic has exacerbated those problems with further delays from supply chain disruptions, lumber shortages, and now economy-wide labor shortages,” the Goldman Sachs report said.