Experts: New housing construction shortage expected to last until 2022

The rate at which new housing in being built in this country has not recovered since the housing crisis, and it looks like that trend may be sticking around for a while.

New housing start rates are expected to remain below historical averages through 2022, or later, according to new research from Zillow.

The average seasonally adjusted annual rate of new single-family housing starts since 1959 was more than one million, but since 2007, the rate has not reached that level.

Since the Great Recession, home values have recovered, and in some cases, surpasses pre-recession peaks, Zillow said, but construction has not kept up. 

“The American housing landscape was shaped in a big way by the drive for the classic American dream; swaths of cities were set aside solely for single-family, detached homes, with big minimum lot sizes and slow local review processes. Jump ahead three decades and housing affordability is a major issue across the country,” said Zillow Director of Economic Research Skylar Olsen.

According to Zillow, the rate of new single-family construction in the U.S. has yet to recover to its historic norm following the collapse during the Great Recession. 

(Image courtesy of Zillow. Click to enlarge.)

Recently, the Zillow Home Price Expectations Survey showed that, on average, home values are expected to grow just 3.6% in 2019, which is down from the 4.2% expected growth when surveyed a year ago. There were even some who said they expect the growth to get down to 2.15%.

Only 20% of the panelists in the survey said they expect single-family home starts to reach one million again by the end of 2020. More than a quarter of panelists said it might happen in 2021, and 54% said it would likely happen in 2022 or later. 

In the past, single-family housing starts have averaged more than one million units a month, reaching as high as more than 1.8 million units in 2006, pre-recession. Although housing starts have grown since then, they have not reached the historic average. 

“Those same practices now arguably limit the ability of the next generation to become homeowners. Without new homes to meet population growth and replace an aging housing stock, home buying is expected to move further out of reach,” Olsen said. “The most-popular solutions among experts all ultimately suggest rolling back these rules to increase flexibility and get more projects through the process faster.

Another reason there is low inventory of single-family home starts is blamed on issues regarding finding buildable land, securing lumber and other materials and finding workers, Zillow said.

(Image courtesy of Zillow. Click to enlarge.)