A shortage of housing supply is hindering the housing market from making a full recovery, according to an article by Paul Davidson for USA Today.
A lack of constructions workers reduced the number of new builds being constructed, and economists project that the National Association of Home Builders will report today an unchanged index of builder sentiment for the third consecutive month in April, according to the article. It is expected to report at 58, slightly below January’s 61.
From the article:
It may be that high labor costs and land prices are crimping some builders’ profits, says Lewis Alexander, brokerage Nomura’s chief U.S. economist. In turn, the higher costs are helping push up home prices, which may be dampening sales a bit.
Housing starts soared in February, with groundbreakings for single-family units hitting the highest level in more than eight years. Besides the meager home inventories, driving the revival is strong job growth, low mortgage rates and a growing number of Millennials who are itching to move out of their parents’ basements.
Economists expect the Commerce Department to report Tuesday that housing starts decreased by 1.1% to 1.17 million.
Existing home sales fell 7.1% in February, however Alexander has a few reasons for that.
From the article:
Alexander cites quirky factors, such as the challenge of seasonally adjusting February’s figures in a leap year and a drop in contract signings in January due to snowstorms, which affected closings the following month. Yet the generally healthy market is also hindered by the longer-lasting headwind of tight inventories.
