Although inventory levels have been elevated in recent months, if new home construction continues to decline over the next year or two, a housing shortage is possible. New home construction has steadily decreased over the past several months. The National Association of Home Builders reported the number of housing starts in the month of February were exceptionally low, with only a 479,000 annual unit production pace.
For the past two years housing starts have remained in the 500,000 to 600,000 unit pace range. Historically, normal activity would be in the range of 1.5 million to 1.6 million. The U.S. population grows by approximately 3 million people each year.
A look back… Since 2003 the pace of housing starts has been somewhat volatile with 2005 representing the peak at a 2.07 million unit pace. Since that time the pace has declined significantly. Talk to a Realtor® about what they’re seeing in the local market in terms of available housing supply.