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Housing Shortage Forecast To Worsen
Prediction Based on June Permit Data

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Buying a home is already difficult, what with a continuing shortage in the supply of housing, ever-rising prices and other contributing factors. Now experts are troubled by the fact permits dropped in June by 15.4 percent year-over-year.


Housing industry experts are saying that the current housing shortage, already troublesome, is only going to get worse.

They are basing their opinions on permit data in the Census Bureau's residential construction report for the month of June.

It says single-family home permits have dropped 15.4 percent on a year-over-year basis. If there is any good news in that data, it is that permits are up 5.8 percent compared to May.

But the year-to-year decline in permits will only exacerbate a problem with a shortage on the supply side of the housing market.

"So get ready for a continuing decrease in the supply of new homes later this year and into the next," said Jonathan Smoke, chief economist for realtor.com. "It takes about six to nine months to complete a residence once a permit is secured.

"And, yes, that's expected to drive prices up even higher," Smoke added.

Professional Builder has said on its website that developers are not building more homes because of fears the economic recovery will head south, and that the demand for homes would then dry up.

"Because new homes are more expensive than existing homes, builders have more to lose if the economy stumbles and they are left with a number of newly constructed homes on their hands with no buyers," Professional Builder said.

Single-family homes aren't the only housing types to see a precipitous drop in permits. The numbers have declined for both condominium and apartment buildings of five or more units. These housing types have seen their permits decline a combined 39.2 percent, year-over-year. Permits for condos and apartments are up almost 4.9 percent, however, compared to May.

Data regarding housing completions contained good news. Completions jumped 16.5 percent year-over-year, and increased 19 percent month-over-month.

"We're just not seeing the growth in new construction that would be necessary to improve the shortage of apartments for rent and homes for sale," Smoke said. "So we're likely to see continued rent and home price increases."






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July 22, 2019, 10:14 am PDT

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