All Time Record of Housing Units Under Construction, At the Same Time Housing Starts Crash
The Oddities of the Current Real Estate Market Increase Ever More
Back in 2019, I felt like the real estate market was odd. Nowadays, I would do anything to go back to such a “normal” market. (Let alone everything else in the world as well.)
The great Bill McBride has a new post outlining an odd record we’re currently living through. Namely, there are more housing units under construction right now than there ever have been in the past.
While single-family houses under construction is behind 2005-2007, the combined number of houses and multifamily units is “1.722 million units under construction. This is the all-time record number of units under construction.”
Meanwhile, new construction starts have sharply declined. Rick Palacios, the director of research at John Burns Real Estate Consulting, puts it this way:
As Bill McBride’s graphs show, new housing starts have precipitously declined since the recent upsurge in interest rates.
The increased number of houses under construction is in large part a result of developer’s responding to the nationwide housing shortage and various supply chain problems.
Now, as a record number of new properties come on the market as buyers are slowing down and trying to wait out high interest rates, it will be very interesting to see how things play out.
There is still a housing shortage in the United States which has made housing unaffordable for many. And housing has become more unaffordable with interest rate increases. But those rate increases will dissuade developers from building new houses. And that will make the housing crisis worse.
So will demand or supply win in this complete mess? We shall see…
Are houses just taking longer to complete? I can't see how this makes any sense and how they are taking so long to finish.