The housing crunch is due to get a lot worse this year, according to Realtor.com’s Clare Trapasso and her analysis of the U.S. Department of Commerce’s monthly new residential construction report.
Single-family builders applied for 16.3% fewer building permits in July than they did in June, and 7.2% fewer than they did last July, according to the rates not adjusted for seasonal inflation. Many of the homes that are being built are high-priced luxury properties, owing to high land, labor, and materials costs. (In New York City, the issue is compounded by the expiration of the 421-a tax exemption.)
“We aren’t building enough homes to keep up with population growth,” says Realtor.com’s chief economist, Jonathan Smoke. “It means prices and rents will continue to go up at above average rates.”
The number of homes beginning construction is up by 6.3% year over year, however, and 3% from June. Finished homes hitting the market are up 1.6% year over year – but down nearly 9.9% from June.