Rise in New-Home Listings Does Little to Relieve the Supply-Demand Imbalance
- Listings of newly built homes prop up for-sale inventory. The number of single-family houses available for purchase grew by 3.8 percent from May to June, a change of tides after listings steadily declined during the pandemic.
- Luxury rentals offer a more affordable alternative to ownership. The increase in houses for-sale is not affecting rental demand, with the multifamily sector just registering its largest quarterly absorption total since at least 1993.
- Apartments attracting more investors. Investor confidence in multifamily is strengthening after the record-setting second quarter performance and an outlook that is bolstered by a lack of moderately priced homes available for purchase.
- Development pace will retreat. Single-family starts were up 28.5 percent year over year in June, but construction permits fell to the lowest level in 10 months.
- Aging millennials to exacerbate supply shortage. Household formation in the U.S. in 2021 is expected to be at its fastest annual pace in more than a decade and remain historically high in the coming years.
Sources: Marcus & Millichap Research Services; Capital Economics; Freddie Mac; Moody’s Analytics; Mortgage Bankers Association; National Association of Home Builders; National Association of Realtors; RealPage, Inc.; U.S. Census Bureau; Wells Fargo