It’s all about supply and demand. The tight supply of available homes is prompting more house hunters to bid up home prices, housing analysts say.
“Prices are rising just too fast,” says Lawrence Yun, chief economist with the National Association of REALTORS®. “And certainly far ahead of people’s income.”
NAR recently reported that the limited number of homes for sale was pushing the national median sales price above its 2006 peak. In its latest existing-home sales report, NAR noted that the median home price for all housing types reached $236,400 in June – 6.5 percent above year ago levels and surpassing the peak median sales price set in July 2006 at $230,400.
Housing’s inventory problem is occurring across housing types. Condos made up just 5.5 percent of all multifamily building in the first quarter of this year, the lowest on record for the Commerce Department, which has been tracking such information for more than four decades. Single-family construction is also about half of what it should be, according to Bob Denk, senior economist at the National Association of Home Builders.
As for what’s hindering the new-home supply, Denk points to a skilled labor shortage in the building industry as well as a shortage in the number of lots to build on.
“We are having these supply chain headwinds,” Denk says. “It’s hard to just double overnight. But the other part of that is we have produced at this level before, so it’s not impossible.”
Daily Real Estate News | Tuesday, August 11, 2015