“The principal reason for the inventory shortage is the cumulative impact of homebuilders not being in the market for well over five years,” Yun wrote in his most recent economic update. “Homebuilders typically put up 1.5 million new homes annually.”
Originators may have struggled with business due to a shortage in construction of new homes, which dipped to 550,000 in 2009 annually from the norm of 1.5 million. And with each year trending higher, Yun believes 2017 may be the year construction levels finally return to normal.
“Builders will construct more homes. By 1.1 million in 2015 and 1.4 million in 2016,” Yun wrote. “New home sales will follow this trend. This rising trend will steadily relieve housing shortage.”
And while home building in general is expected to return to historical norms in the next 24 months, Yun says construction for apartments has returned to normal levels.
However, not all is optimistic for originators. As it stands, housing prices are rebounding nicely – and providing larger commissions, but there is a fear that buyers will be forced out of the market as a result.
“Housing affordability is falling. Home prices rising too fast are one reason,” Yun wrote. “The other reason is due to rising mortgage rates. Cash-buys have been coming down so rates will count for more in the future.
“Few things in the world could be more frustrating and demoralizing than for renters to start a savings program but only to witness home prices and down payment requirements blowing by past them.”
Lawrence Yun, chief economist for the National Association of Realtors, believes home construction will in the next two years finally return to normal levels for the first time since the recession.