A poll by Reuters of property market analysists revels that “an acute shortage of affordable homes in the U.S. will continue over the coming year,” said a new report by CNBC.
“U.S. house prices are slightly over-valued when looking at fundamental valuation metrics such as the median-home-price-to-income ratio,” noted Brent Campbell, economist at Moody’s Analytics.
While jobs growth and wages are rising at the best pace in years-to-decades, pay is not keeping pace with the even faster spike in housing costs. According to CNBC, “Annual average earnings growth has remained below 3 percent even as house price rises have averaged more than 5 percent over the last few years.”
“We are not seeing a temporary phenomenon. House prices have been outrunning family incomes for several years in the U.S. and while demand has cooled off a bit, the supply side is still very tight,” said Sal Guatieri, senior economist at BMO Financial Group.
Guatieri added, “I think house prices will continue to outrun family incomes for at least another year and it will take some time for demand to slow and to some extent supply to increase.”
Existing home sales account for “about 90 percent of U.S. turnover,” and are forecast to rise slightly and average 5.60 million units in each quarter this year from about 5.46 million units in April.
That would be well below the peak of 7 million units averaged during the previous housing market boom. All of these are factors which will keep prices elevated and make housing less affordable.
As regular Daily Business News readers know, the National Association or Realtors ™ (NAR) Chief Economist Lawrence Yun has said that the only way to solve this is for builders to get very busy.
It’s a recipe – at least in theory – for a manufactured housing boom. But for a variety of reasons, the industry has failed to convert surfers and seekers into more qualified applicants and cash buyers. ## (News, analysis, and commentary.)
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