Construction Industry Struggles to Keep Pace with Plummeting Housing Inventory
By Maggie Wilson @ Real Estate Daily
January 30, 2018

Housing supply in the United States is at record lows and the construction industry is struggling rebound in a tight market. Mortgage rates are rising as well, which could exacerbate the current situation.

Key Takeaways

  • There are 10% fewer homes for sale than a year ago
  • Mortgage rates are rising and threatening to make the situation worse
  • Builders will struggle to keep up in the busiest construction season of the year
Source: CNBC


The housing market will have intense competition this spring as low inventory continues to put upwards pressure on home prices. Home builders have been gearing up for an active season, but will have trouble catching up with the depleted housing inventory until 2019.

There are about 10% fewer homes for sale nationwide. There are almost 40% fewer homes for sale in the nation’s hottest markets, according to Zillow.

Many buyers are struggling to afford high home prices and rising mortgage rates are not helping. The average rate of 30-year FRMs is already up to around 4.25%, a quarter of a point above the last year, according to Mortgage News Daily.

“The market is starving for new homes, but it won’t be easy for builders struggling with high and rising land, labor and lumber costs,” said Zillow senior economist Aaron Terrazas.

“Aging millennials and young families may be able to find more affordable new homes for sale this year, but they’ll most likely be in further-flung suburbs with more grueling commutes to urban job centers.”