America’s Housing Shortage Just Got Worse
Summary
New home construction in the U.S. dropped for the fourth month in a row in July, hitting the lowest level since November 2022. Rising mortgage rates and high home prices are causing fewer buyers to purchase homes, leading to more unsold houses despite a big shortage of affordable homes.Key Facts
- Single-family housing starts dropped 9.9% in July to 808,000 units per year, the lowest in over three and a half years.
- Total new home starts, including apartments, fell 12.4% to 1.239 million units annualized.
- The average 30-year fixed mortgage rate increased from 5.98% in February to 6.67% in mid-August 2024.
- The national median home price in July was $434,100, a 2% increase from the previous year.
- Contract signings for existing homes fell 2.3% in July, reaching the lowest point since January.
- Existing home sales decreased 1.7% month-to-month in July but rose slightly year-over-year by 0.7%.
- Homebuilders face a paradox: the U.S. needs more affordable homes, but there is a growing amount of unsold homes due to reduced demand.
- The housing shortage started after the 2008 recession when homebuilding collapsed and has since grown to about 3 million homes short.
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